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Eλλην

WALL STREETAND THE

BOLSHEVIK REVOLUTION

ByAntony C. Sutton

http://Ellhn.e-e-e.gr



TABLE OF CONTENTSPreface

Chapter I:

The Actors on the Revolutionary Stage

Chapter II:

Trotsky Leaves New York to Complete the Revolution

Woodrow Wilson and a Passport for Trotsky - Canadian GovernmentDocuments on Trotsky's Release - Canadian Military Intelligence Views Trotsky- Trotsky's Intentions and Objectives

Chapter III:

Lenin and German Assistance for the Bolshevik Revolution

The Sisson Documents - The Tug-of-War in WashingtonChapter IV:

Wall Street and the World Revolution

American Bankers and Tsarist Loans - Olof Aschberg in New York, 1916 -Olof Aschberg in the Bolshevik Revolution - Nya Banken and Guaranty Trust J oin Ruskombank - Guaranty Trust and German Espionage in the UnitedStates, 1914-1917 - The Guaranty Trust-Minotto-Caillaux Threads

Chapter V:

The American Red Cross Mission in Russia — 1917American Red Cross Mission to Russia — 1917 American Red Cross Mission toRumania - Thompson in Kerensky's Russia - Thompson Gives the Bolsheviks $1Million - Socialist Mining Promoter Raymond Robins - The International RedCross and Revolution

Chapter VI:

Consolidation and Export of the Revolution

A C onsultation with Lloyd - George Thompson's Intentions and Objec tives - Thompson Returns to the United States - The Unofficial Ambassadors: Robins,Lockhart, and Sadoul - Exporting the Revolution: J acob H. Rubin - Exportingthe Revolution: Robert Minor

Chapter VII:

The Bolsheviks Return to New York

A Raid on the Soviet - Bureau in New York - Corporate Allies for the Soviet

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http://reformed-theology.org/html/books/bolshevik_revolution/chapter_02.htm



Bureau - European Bankers Aid the Bolsheviks

Chapter VIII: 120 Broadway, New York City

American International Corporation - The Influence of American Internationalon the Revolution - The Federal Reserve Bank of New York - American-RussianIndustrial Syndicate Inc. - J ohn Reed: Establishment Revolutionary - J ohnReed and the Metropolitan Magazine

Chapter IX:

Guaranty Trust Goes to Russia

Wall Street Comes to the Aid of Professor Lomonossoff - The Stage Is Set forCommercial Exploitation of Russia - Germany and the United States Strugglefor Russian Business - Soviet Gold and American Banks - Max May of Guaranty Trust Becomes Director of Ruskombank

Chapter X:

J.P. Morgan Gives a Little Help to the Other Side

United Americans Formed to Fight Communism - United Americans Reveals"Startling Disclosures" on Reds - Conclusions Concerning United AmericansMorgan and Rockefeller Aid Kolchak

Chapter XI:

The Alliance of Bankers and Revolution

The Evidence Presented: A Synopsis - The Explanation for the Unholy Alliance The Marburg Plan

Appendix I:

Directors of Major Banks, Firms, and Institutions Mentioned in This Book (as in1917-1918)

Appendix II:

The Jewish-Conspiracy Theory of the Bolshevik Revolution

Appendix III:

Selected Documents from Government Files of the United States and GreatBritain

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TO

those unknown Russian libertarians, also known as Greens, who in 1919 foughtboth the Reds and the Whites in their attempt to gain a free and voluntary

Russia

*****

Copyright 2001

This work was created with the permission of Antony C. Sutton.

All rights reserved. No portion of this book may be reproduced without writtenpermission from the author, except by a reviewer who may quote brief

passages in connection with a review.

HTML version created in the United States of America by Studies in Reformed Theology

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PREFACESince the early 1920s, numerous pamphlets and articles, even a few books,have sought to forge a link between "international bankers" and "Bolshevik

revolutionaries." Rarely have these attempts been supported by hardevidence, and never have such attempts been argued within the frameworkof a scientific methodology. Indeed, some of the "evidence" used in theseefforts has been fraudulent, some has been irrelevant, much cannot bechecked. Examination of the topic by academic writers has been studiouslyavoided; probably because the hypothesis offends the neat dichotomy of capitalists versus Communists (and everyone knows, of course, that these arebitter enemies). Moreover, because a great deal that has been writtenborders on the absurd, a sound academic reputation could easily bewrecked on the shoals of ridicule. Reason enough to avoid the topic.

Fortunately, the State Department Decimal File, particularly the 861.00section, contains extensive documentation on the hypothesized link. Whenthe evidence in these official papers is merged with nonofficial evidencefrom biographies, personal papers, and conventional histories, a trulyfascinating story emerges.

We find there was a link between some New York international bankers andmany revolutionaries, including Bolsheviks. These banking gentlemen — whoare here identified — had a financial stake in, and were rooting for, thesuccess of the Bolshevik Revolution. Who, why — and for how much — is thestory in this book.

Antony C. Sutton

March 1974

5



Chapter I

THE ACTORS ON THE REVOLUTIONARY

STAGE

Dear Mr. President:

I am in sympathy with the Soviet form of government as that best suited forthe Russian people...

Letter to President Woodrow Wilson (October 17, 1918) from William Lawrence

Saunders, chairman, Ingersoll-Rand Corp.; direc tor, American International

Corp.; and deputy chairman, Federal Reserve Bank of New York

The frontispiece in this book was drawn by cartoonist Robert Minor in 1911 forthe St. Louis Post-Dispatch. Minor was a talented artist and writer whodoubled as a Bolshevik revolutionary, got himself arrested in Russia in 1915 foralleged subversion, and was later bank-rolled by prominent Wall Streetfinanciers. Minor's cartoon portrays a bearded, beaming Karl Marx standing inWall Street with Socialism tucked under his arm and accepting thecongratulations of financial luminaries J .P. Morgan, Morgan partner GeorgeW. Perkins, a smug J ohn D. Rockefeller, John D. Ryan of National City Bank,and Teddy Roosevelt — prominently identified by his famous teeth — in thebackground. Wall Street is decorated by Red flags. The cheering crowd andthe airborne hats suggest that Karl Marx must have been a fairly popular sortof fellow in the New York financial district.

Was Robert Minor dreaming? On the contrary, we shall see that Minor was onfirm ground in depicting an enthusiastic alliance of Wall Street and Marxistsocialism. The characters in Minor's cartoon — Karl Marx (symbolizing thefuture revolutionaries Lenin and Trotsky), J . P. Morgan, J ohn D. Rockefeller —and indeed Robert Minor himself, are also prominent characters in this book.

The contradictions suggested by Minor's cartoon have been brushed underthe rug of history because they do not fit the accepted conceptualspectrum of political left and political right. Bolsheviks are at the left end of the political spectrum and Wall Street financiers are at the right end;therefore, we implicitly reason, the two groups have nothing in common andany alliance between the two is absurd. Factors contrary to this neatconceptual arrangement are usually rejected as bizarre observations orunfortunate errors. Modern history possesses such a built-in duality and

6



certainly if too many uncomfortable facts have been rejected and brushedunder the rug, it is an inaccurate history.

On the other hand, it may be observed that both the extreme right and theextreme left of the conventional political spectrum are absolutely collectivist.

The national soc ialist (for example, the fascist) and the international soc ialist(for example, the Communist) both recommend totalitarian politico-economic systems based on naked, unfettered political power and individualcoercion. Both systems require monopoly control of society. While monopolycontrol of industries was once the objective of J . P. Morgan and J . D.Rockefeller, by the late nineteenth century the inner sanctums of Wall Streetunderstood that the most efficient way to gain an unchallenged monopolywas to "go political" and make society go to work for the monopolists —under the name of the public good and the public interest. This strategy wasdetailed in 1906 by Frederick C. Howe in his Confessions of a Monopolist.1

Howe, by the way, is also a figure in the story of the Bolshevik Revolution.

Therefore, an alternative conceptual packaging of political ideas andpolitico-economic systems would be that of ranking the degree of individualfreedom versus the degree of centralized political control. Under such anordering the corporate welfare state and socialism are at the same end of the spectrum. Hence we see that attempts at monopoly control of societycan have different labels while owning common features.

Consequently, one barrier to mature understanding of recent history is thenotion that all capitalists are the bitter and unswerving enemies of all Marxistsand socialists. This erroneous idea originated with Karl Marx and wasundoubtedly useful to his purposes. In fac t, the idea is nonsense. There hasbeen a continuing, albeit concealed, alliance between international politicalcapitalists and international revolutionary socialists — to their mutual benefit. This alliance has gone unobserved largely because historians — with a fewnotable exceptions — have an unconscious Marxian bias and are thuslocked into the impossibility of any such alliance existing. The open-mindedreader should bear two clues in mind: monopoly capitalists are the bitterenemies of laissez-faire entrepreneurs; and, given the weaknesses of socialistcentral planning, the totalitarian socialist state is a perfect captive market formonopoly capitalists, if an alliance can be made with the socialist

powerbrokers. Suppose — and it is only hypothesis at this point — thatAmerican monopoly capitalists were able to reduce a planned socialistRussia to the status of a captive technical colony? Would not this be thelogical twentieth-century internationalist extension of the Morgan railroadmonopolies and the Rockefeller petroleum trust of the late nineteenthcentury?

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Apart from Gabriel Kolko, Murray Rothbard, and the revisionists, historianshave not been alert for such a combination of events. Historical reporting,with rare exceptions, has been forced into a dichotomy of capitalists versussocialists. George Kennan's monumental and readable study of the RussianRevolution consistently maintains this fiction of a Wall Street-Bolshevik

dichotomy.2 Russia Leaves the War has a single incidental reference to the J .P. Morgan firm and no reference at all to Guaranty Trust Company. Yetboth organizations are prominently mentioned in the State Department files,to which frequent reference is made in this book, and both are part of thecore of the evidence presented here. Neither self-admitted "Bolshevikbanker" Olof Aschberg nor Nya Banken in Stockholm is mentioned in Kennanyet both were central to Bolshevik funding. Moreover, in minor yet crucialcircumstances, at least crucial for our argument, Kennan is factually in error.For example, Kennan cites Federal Reserve Bank direc tor William Boyce Thompson as leaving Russia on November 27, 1917. This departure date

would make it physically impossible for Thompson to be in Petrograd onDecember 2, 1917, to transmit a cable request for $1 million to Morgan inNew York. Thompson in fact left Petrograd on December 4, 1918, two daysafter sending the cable to New York. Then again, Kennan states that onNovember 30, 1917, Trotsky delivered a speech before the Petrograd Soviet inwhich he observed, "Today I had here in the Smolny Institute two Americansclosely connected with American Capitalist elements "According to Kennan,it "is difficult to imagine" who these two Americans "could have been, if notRobins and Gumberg." But in [act Alexander Gumberg was Russian, notAmerican. Further, as Thompson was still in Russia on November 30, 1917, thenthe two Americans who visited Trotsky were more than likely Raymond Robins,a mining promoter turned do-gooder, and Thompson, of the Federal ReserveBank of New York.

The Bolshevization of Wall Street was known among well informed circles asearly as 1919. The financ ial journalist Barron recorded a conversation with oilmagnate E. H. Doheny in 1919 and specifically named three prominentfinanc iers, William Boyce Thompson, Thomas Lamont and Charles R. Crane:

Aboard S.S. Aquitania, Friday Evening, February 1, 1919.

Spent the evening with the Dohenys in their suite. Mr. Doheny said: If you

believe in democracy you cannot believe in Socialism. Socialism is the poisonthat destroys democracy. Democracy means opportunity for all. Socialismholds out the hope that a man can quit work and be better off. Bolshevism isthe true fruit of socialism and if you will read the interesting testimony beforethe Senate Committee about the middle of J anuary that showed up all thesepacifists and peace-makers as German sympathizers, Socialists, andBolsheviks, you will see that a majority of the college professors in the United

8



States are teaching socialism and Bolshevism and that fifty-two collegeprofessors were on so-called peace committees in 1914. President Eliot of Harvard is teaching Bolshevism. The worst Bolshevists in the United States arenot only college professors, of whom President Wilson is one, but capitalistsand the wives of capitalists and neither seem to know what they are talking

about. William Boyce Thompson is teaching Bolshevism and he may yetconvert Lamont of J .P. Morgan & Company. Vanderlip is a Bolshevist, so isCharles R. Crane. Many women are joining the movement and neither they,nor their husbands, know what it is, or what it leads to. Henry Ford is anotherand so are most of those one hundred historians Wilson took abroad with himin the foolish idea that history can teach youth proper demarcations of races,peoples, and nations geographically.3

In brief, this is a story of the Bolshevik Revolution and its aftermath, but a storythat departs from the usual conceptual straitjacket approach of capitalistsversus Communists. Our story postulates a partnership between internationalmonopoly capitalism and international revolutionary socialism for their mutualbenefit. The final human cost of this alliance has fallen upon the shoulders of the individual Russian and the individual American. Entrepreneurship hasbeen brought into disrepute and the world has been propelled towardinefficient socialist planning as a result of these monopoly maneuverings inthe world of politics and revolution.

This is also a story reflecting the betrayal of the Russian Revolution. The tsarsand their corrupt political system were ejected only to be replaced by thenew powerbrokers of another corrupt political system. Where the United

States could have exerted its dominant influence to bring about a free Russiait truckled to the ambitions of a few Wall Street financiers who, for their ownpurposes, could accept a centralized tsarist Russia or a centralized MarxistRussia but not a decentralized free Russia. And the reasons for theseassertions will unfold as we develop the underlying and, so far, untold historyof the Russian Revolution and its aftermath.4

Footnotes:

1

"These are the rules of big business. They have superseded the teachings of our parents and are reducible to a simple maxim: Get a monopoly; letSociety work for you: and remember that the best of all business is politics, fora legislative grant, franchise, subsidy or tax exemption is worth more than aKimberly or Comstock lode, since it does not require any labor, either mentalor physical, lot its exploitation" (Chicago: Public Publishing, 1906), p. 157.

2George F. Kennan, Russia Leaves the War (New York: Atheneum, 1967); and

9



Decision to Intervene.. Soviet-American Relations, 1917-1920 (Princeton, N.J .:Princeton University Press, 1958).

3Arthur Pound and Samuel Taylor Moore, They Told Barron (New York: Harper& Brothers, 1930), pp. 13-14.

4There is a parallel, and also unknown, history with respect to theMakhanovite movement that fought both the "Whites" and the "Reds" in theCivil War of 1919-20 (see Voline, The Unknown Revolution [New York:Libertarian Book Club, 1953]). There was also the "Green" movement, whichfought both Whites and Reds. The author has never seen even one isolatedmention of the Greens in any history of the Bolshevik Revolution. Yet theGreen Army was at least 700,000 strong!

10



Chapter II

TROTSKY LEAVES NEW YORK TO

COMPLETE THE REVOLUTION

You will have a revolution, a terrible revolution. What course it takes willdepend much on what Mr. Rockefeller tells Mr. Hague to do. Mr. Rockefelleris a symbol of the American ruling class and Mr. Hague is a symbol of itspolitical tools.

Leon Trotsky, in New York Times, December 13, 1938. (Hague was a New

J ersey politician)

In 1916, the year preceding the Russian Revolution, internationalist Leon Trotsky was expelled from France, officially because of his participation in theZimmerwald conference but also no doubt because of inflammatory articleswritten for Nashe Slovo, a Russian-language newspaper printed in Paris. InSeptember 1916 Trotsky was politely escorted across the Spanish border byFrench police. A few days later Madrid police arrested the internationalistand lodged him in a "first-class cell" at a charge of one-and-one-haft pesetasper day. Subsequently Trotsky was taken to Cadiz, then to Barcelona finally tobe placed on board the Spanish Transatlantic Company steamer Monserrat.

Trotsky and family c rossed the Atlantic Ocean and landed in New York on J anuary 13, 1917.

Other Trotskyites also made their way westward across the Atlantic. Indeed,one Trotskyite group acquired sufficient immediate influence in Mexico towrite the Constitution of Querétaro for the revolutionary 1917 Carranzagovernment, giving Mexico the dubious distinction of being the firstgovernment in the world to adopt a Soviet-type constitution.

How did Trotsky, who knew only German and Russian, survive in capitalistAmerica? According to his autobiography, My Life, "My only profession in

New York was that of a revolutionary soc ialist." In other words, Trotsky wroteoccasional articles for Novy Mir, the New York Russian socialist journal. Yet weknow that the Trotsky family apartment in New York had a refrigerator and atelephone, and, according to Trotsky, that the family occasionally traveled ina chauffeured limousine. This mode of living puzzled the two young Trotskyboys. When they went into a tearoom, the boys would anxiously demand of their mother, "Why doesn't the chauffeur come in?"1 The stylish living standardis also at odds with Trotsky's reported income. The only funds that Trotsky

11



admits receiving in 1916 and 1917 are $310, and, said Trotsky, "I distributed the$310 among five emigrants who were returning to Russia." Yet Trotsky hadpaid for a first-class cell in Spain, the Trotsky family had traveled acrossEurope to the United States, they had acquired an excellent apartment inNew York — paying rent three months in advance — and they had use of a

chauffeured limousine. All this on the earnings of an impoverishedrevolutionary for a few articles for the low-circulation Russian-languagenewspaper Nashe Slovo in Paris and Novy Mir in New York!

J oseph Nedava estimates Trotsky's 1917 income at $12.00 per week,"supplemented by some lecture fees."2 Trotsky was in New York in 1917 forthree months, from J anuary to March, so that makes $144.00 in income fromNovy Mir and, say, another $100.00 in lec ture fees, for a total of $244.00. Of this $244.00 Trotsky was able to give away $310.00 to his friends, pay for theNew York apartment, provide for his family — and find the $10,000 that wastaken from him in April 1917 by Canadian authorities in Halifax. Trotsky claimsthat those who said he had other sources of income are "slanderers"spreading "stupid calumnies" and "lies," but unless Trotsky was playing thehorses at the J amaica racetrack, it can't be done. Obviously Trotsky had anunreported source of income.

What was that source? In The Road to Safety, author Arthur Willert says Trotskyearned a living by working as an electrician for Fox Film Studios. Other writershave cited other occupations, but there is no evidence that Trotsky occupiedhimself for remuneration otherwise than by writing and speaking.

Most investigation has centered on the verifiable fact that when Trotsky leftNew York in 1917 for Petrograd, to organize the Bolshevik phase of therevolution, he left with $10,000. In 1919 the U.S. Senate Overman Committeeinvestigated Bolshevik propaganda and German money in the United Statesand incidentally touched on the source of Trotsky's $10,000. Examination of Colonel Hurban, Washington attaché to the Czech legation, by the OvermanCommittee yielded the following:

COL. HURBAN: Trotsky, perhaps, took money from Germany, but Trotsky willdeny it. Lenin would not deny it. Miliukov proved that he got $10,000 fromsome Germans while he was in America. Miliukov had the proof, but he

denied it. Trotsky did, although Miliukov had the proof.

SENATOR OVERMAN: It was charged that Trotsky got $10,000 here.

COL. HURBAN: I do not remember how much it was, but I know it was aquestion between him and Miliukov.

SENATOR OVERMAN: Miliukov proved it, did he?

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COL. HURBAN: Yes, sir.

SENATOR OVERMAN: Do you know where he got it from?

COL. HURBAN: I remember it was $10,000; but it is no matter. I will speak abouttheir propaganda. The German Government knew Russia better thananybody, and they knew that with the help of those people they coulddestroy the Russian army.

(At 5:45 o'clock p.m. the subcommittee adjourned until tomorrow,Wednesday, February 19, at 10:30 o'clock a.m.)3

It is quite remarkable that the committee adjourned abruptly before thesource of Trotsky's funds could be placed into the Senate record. Whenquestioning resumed the next day, Trotsky and his $10,000 were no longer of interest to the Overman Committee. We shall later develop evidenceconcerning the financing of German and revolutionary activities in the UnitedStates by New York financial houses; the origins of Trotsky's $10,000 will thencome into focus.

An amount of $10,000 of German origin is also mentioned in the official Britishtelegram to C anadian naval authorities in Halifax, who requested that Trotskyand party en route to the revolution be taken off the S.S. Kristianiafjord (seepage 28). We also learn from a British Directorate of Intelligence report4 thatGregory Weinstein, who in 1919 was to become a prominent member of theSoviet Bureau in New York, collected funds for Trotsky in New York. Thesefunds originated in Germany and were channeled through the Volks-zeitung,

a German daily newspaper in New York and subsidized by the Germangovernment.

While Trotsky's funds are officially reported as German, Trotsky was activelyengaged in American politics immediately prior to leaving New York forRussia and the revolution. On March 5, 1917, American newspapersheadlined the increasing possibility of war with Germany; the same evening Trotsky proposed a resolution at the meeting of the New York County SocialistParty "pledging Socialists to encourage strikes and resist recruiting in theevent of war with Germany."5 Leon Trotsky was called by the New York Times

"an exiled Russian revolutionist." Louis C. Fraina, who cosponsored the Trotsky

resolution, later — under an alias — wrote an uncritical book on the Morganfinancial empire entitled House of Morgan.6

The Trotsky-Fraina proposal was

opposed by the Morris Hillquit faction, and the Socialist Party subsequentlyvoted opposition to the resolution.7

More than a week later, on March 16, at the time of the deposition of thetsar, Leon Trotsky was interviewed in the offices of Novy Mir.. The interviewcontained a prophetic statement on the Russian revolution:

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"... the committee which has taken the place of the deposed Ministry inRussia did not represent the interests or the aims of the revolutionists, that itwould probably be shortlived and step down in favor of men who would bemore sure to carry forward the democratization of Russia."8

The "men who would be more sure to carry forward the democratization of Russia," that is, the Mensheviks and the Bolsheviks, were then in exile abroadand needed first to return to Russia. The temporary "committee" was thereforedubbed the Provisional Government, a title, it should be noted, that was usedfrom the start of the revolution in March and not applied ex post facto byhistorians.

WOODROW WILSON AND A PASSPORT FOR TROTSKY

President Woodrow Wilson was the fairy godmother who provided Trotskywith a passport to return to Russia to "carry forward" the revolution. This

American passport was accompanied by a Russian entry permit and a Britishtransit visa. J ennings C. Wise, in Woodrow Wilson: Disciple of Revolution,

makes the pertinent comment, "Historians must never forget that WoodrowWilson, despite the efforts of the British police, made it possible for Leon Trotsky to enter Russia with an American passport."

President Wilson facilitated Trotsky's passage to Russia at the same timecareful State Department bureaucrats, concerned about suchrevolutionaries entering Russia, were unilaterally attempting to tighten uppassport procedures. The Stockholm legation cabled the State Departmenton J une 13, 1917, just after Trotsky crossed the Finnish-Russian border,

"Legation confidentially informed Russian, English and French passport officesat Russian frontier, Tornea, considerably worried by passage of suspiciouspersons bearing American passports."9

To this cable the State Department replied, on the same day, "Department isexercising special care in issuance of passports for Russia"; the departmentalso authorized expenditures by the legation to establish a passport-controloffice in Stockholm and to hire an "absolutely dependable American citizen"for employment on control work.10 But the bird had flown the coop.Menshevik Trotsky with Lenin's Bolsheviks were already in Russia preparing to"carry forward" the revolution. The passport net erected caught only morelegitimate birds. For example, on J une 26, 1917, Herman Bernstein, areputable New York newspaperman on his way to Petrograd to represent theNew York Herald, was held at the border and refused entry to Russia.Somewhat tardily, in mid-August 1917 the Russian embassy in Washingtonrequested the State Department (and State agreed) to "prevent the entryinto Russia of criminals and anarchists... numbers of whom have already goneto Russia."11

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Consequently, by virtue of preferential treatment for Trotsky, when the S.S.Kristianiafjord left New York on March 26, 1917, Trotsky was aboard andholding a U.S. passport — and in company with other Trotskyirerevolutionaries, Wall Street financiers, American Communists, and otherinteresting persons, few of whom had embarked for legitimate business. This

mixed bag of passengers has been described by Lincoln Steffens, theAmerican Communist:

The passenger list was long and mysterious. Trotsky was in the steerage with agroup of revolutionaries; there was a J apanese revolutionist in my cabin. There were a lot of Dutch hurrying home from Java, the only innocent peopleaboard. The rest were war messengers, two from Wall Street to Germany....12

Notably, Lincoln Steffens was on board en route to Russia at the specificinvitation of Charles Richard Crane, a backer and a former chairman of theDemocratic Party's finance committee. Charles Crane, vice president of the

Crane Company, had organized the Westinghouse Company in Russia, wasa member of the Root mission to Russia, and had made no fewer thantwenty-three visits to Russia between 1890 and 1930. Richard Crane, his son,was confidential assistant to then Secretary of State Robert Lansing.According to the former ambassador to Germany William Dodd, Crane "didmuch to bring on the Kerensky revolution which gave way to Communism."13 And so Steffens' comments in his diary about conversations aboard the S.S.Kristianiafjord are highly pertinent:" . . . all agree that the revolution is in its firstphase only, that it must grow. Crane and Russian radicals on the ship think weshall be in Petrograd for the re-revolution.14

Crane returned to the United States when the Bolshevik Revolution (that is,"the re-revolution") had been completed and, although a private citizen, wasgiven firsthand reports of the progress of the Bolshevik Revolution as cableswere received at the State Department. For example, one memorandum,dated December 11, 1917, is entitled "Copy of report on Maximalist uprisingfor Mr Crane." It originated with Maddin Summers, U.S. consul general inMoscow, and the covering letter from Summers reads in part:

I have the honor to enclose herewith a copy of same [above report] with therequest that it be sent for the confidential information of Mr. Charles R. Crane.

It is assumed that the Department will have no objection to Mr. Crane seeingthe report ....15

In brief, the unlikely and puzzling picture that emerges is that Charles Crane,a friend and backer of Woodrow Wilson and a prominent financier andpolitician, had a known role in the "first" revolution and traveled to Russia inmid-1917 in company with the American Communist Lincoln Steffens, whowas in touch with both Woodrow Wilson and Trotsky. The latter in turn was

15



carrying a passport issued at the orders of Wilson and $10,000 from supposedGerman sources. On his return to the U.S. after the "re-revolution," Crane wasgranted access to official documents concerning consolidation of theBolshevik regime: This is a pattern of interlocking — if puzzling — events thatwarrants further investigation and suggests, though without at this point

providing evidence, some link between the financier Crane and therevolutionary Trotsky.

CANADIAN GOVERNMENT DOCUMENTS ON TROTSKY'S RELEASE16

Documents on Trotsky's brief stay in Canadian custody are now de-c lassifiedand available from the Canadian government archives. According to thesearchives, Trotsky was removed by Canadian and British naval personnel fromthe S.S. Kristianiafjord at Halifax, Nova Scotia, on April 3, 1917, listed as a

German prisoner of war, and interned at the Amherst, Nova Scotia,internment station for German prisoners. Mrs. Trotsky, the two Trotsky boys,and five other men described as "Russian Socialists" were also taken off andinterned. Their names are recorded by the Canadian files as: Nickita Muchin,Leiba Fisheleff, Konstantin Romanchanco, Gregor Teheodnovski, GerchonMelintchansky and Leon Bronstein Trotsky (all spellings from original Canadiandocuments).

Canadian Army form LB-l, under serial number 1098 (including thumb prints),was completed for Trotsky, with a description as follows: "37 years old, apolitical exile, occupation journalist, born in Gromskty, Chuson, Russia, Russian

citizen." The form was signed by Leon Trotsky and his full name given as LeonBromstein (sic) Trotsky.

The Trotsky party was removed from the S.S. Kristianiafjord under officialinstructions received by cablegram of March 29, 1917, London, presumablyoriginating in the Admiralty with the naval control officer, Halifax. Thecablegram reported that the Trotsky party was on the "Christianiafjord" (sic)

and should be "taken off and retained pending instructions." The reasongiven to the naval control officer at Halifax was that "these are RussianSocialists leaving for purposes of starting revolution against present Russiangovernment for which Trotsky is reported to have 10,000 dollars subscribed bySocialists and Germans."

On April 1, 1917, the naval control officer, Captain O. M. Makins, sent aconfidential memorandum to the general officer commanding at Halifax, tothe effec t that he had "examined all Russian passengers" aboard the S.S.Kristianiafjord and found six men in the second-class section: "They are allavowed Socialists, and though professing a desire to help the new Russian

16



Govt., might well be in league with German Socialists in America, and quitelikely to be a great hindrance to the Govt. in Russia just at present." CaptainMakins added that he was going to remove the group, as well as Trotsky'swife and two sons, in order to intern them at Halifax. A copy of this report wasforwarded from Halifax to the chief of the General Staff in Ottawa on April 2,

1917.

The next document in the Canadian files is dated April 7, from the chief of theGeneral Staff, Ottawa, to the director of internment operations, andacknowledges a previous letter (not in the files) about the internment of Russian socialists at Amherst, Nova Scotia: ". . . in this connection, have toinform you of the receipt of a long telegram yesterday from the RussianConsul General, MONTREAL, protesting against the arrest of these men asthey were in possession of passports issued by the Russian C onsul General,NEW YORK, U.S.A."

The reply to this Montreal telegram was to the effect that the men wereinterned "on suspicion of being German," and would be released only upondefinite proof of their nationality and loyalty to the Allies. No telegrams fromthe Russian consul general in New York are in the Canadian files, and it isknown that this office was reluctant to issue Russian passports to Russianpolitical exiles. However, there is a telegram in the files from a New Yorkattorney, N. Aleinikoff, to R. M. Coulter, then deputy postmaster general of Canada. The postmaster general's office in Canada had no connection witheither internment of prisoners of war or military activities. Accordingly, thistelegram was in the nature of a personal, nonofficial intervention. It reads:

DR. R. M. COULTER, Postmaster Genl. OTTAWA Russian political exiles returningto Russia detained Halifax interned Amherst camp. Kindly investigate andadvise cause of the detention and names of all detained. Trust as championof freedom you will intercede on their behalf. Please wire collect. NICHOLASALEINIKOFF

On April 11, Coulter wired Aleinikoff, "Telegram received. Writing you thisafternoon. You should receive it tomorrow evening. R. M. Coulter." Thistelegram was sent by the Canadian Pacific Railway Telegraph but chargedto the Canadian Post Office Department. Normally a private business

telegram would be charged to the recipient and this was not officialbusiness. The follow-up Coulter letter to Aleinikoff is interesting because, afterconfirming that the Trotsky party was held at Amherst, it states that they weresuspected of propaganda against the present Russian government and "aresupposed to be agents of Germany." Coulter then adds," . . . they are notwhat they represent themselves to be"; the Trotsky group is "...not detained byCanada, but by the Imperial authorities." After assuring Aleinikoff that thedetainees would be made comfortable, Coulter adds that any information

17



"in their favour" would be transmitted to the military authorities. The generalimpression of the letter is that while C oulter is sympathetic and fully aware of Trotsky's pro-German links, he is unwilling to get involved. On April 11 ArthurWolf of 134 East Broadway, New York, sent a telegram to Coulter. Thoughsent from New York, this telegram, after being acknowledged, was also

charged to the C anadian Post Office Department.

Coulter's reactions, however, reflect more than the detached sympathyevident in his letter to Aleinikoff. They must be considered in the light of thefact that these letters in behalf of Trotsky came from two American residentsof New York City and involved a Canadian or Imperial military matter of international importance. Further, Coulter, as deputy postmaster general, wasa Canadian government official of some standing. Ponder, for a moment,what would happen to someone who similarly intervened in United Statesaffairs! In the Trotsky affair we have two American residents correspondingwith a Canadian deputy postmaster general in order to intervene in behalf of an interned Russian revolutionary.

Coulter's subsequent action also suggests something more than casualintervention. After Coulter acknowledged the Aleinikoff and Wolf telegrams,he wrote to Major General Willoughby Gwatkin of the Department of Militiaand Defense in Ottawa — a man of significant influence in the Canadianmilitary — and attached copies of the Aleinikoff and Wolf telegrams:

These men have been hostile to Russia because of the way the J ews havebeen treated, and are now strongly in favor of the present Administration, sofar as I know. Both are responsible men. Both are reputable men, and I amsending their telegrams to you for what they may be worth, and so that youmay represent them to the English authorities if you deem it wise.

Obviously Coulter knows — or intimates that he knows — a great deal aboutAleinikoff and Wolf. His letter was in effect a character reference, and aimedat the root of the internment problem — London. Gwatkin was well known inLondon, and in fact was on loan to Canada from the War Office in London.17

Aleinikoff then sent a letter to C oulter to thank him

most heartily for the interest you have taken in the fate of the Russian Political

Exiles .... You know me, esteemed Dr. Coulter, and you also know mydevotion to the cause of Russian freedom .... Happily I know Mr. Trotsky, Mr.Melnichahnsky, and Mr. Chudnowsky . . . intimately.

It might be noted as an aside that if Aleinikoff knew Trotsky "intimately," thenhe would also probably be aware that Trotsky had declared his intention toreturn to Russia to overthrow the Provisional Government and institute the "re-revolution." On receipt of Aleinikoff's letter, Coulter immediately (April 16)

18



forwarded it to Major General Gwatkin, adding that he became acquaintedwith Aleinikoff "in connection with Departmental action on United Statespapers in the Russian language" and that Aleinikoff was working "on the samelines as Mr. Wolf . . . who was an escaped prisoner from Siberia."

Previously, on April 14, Gwatkin sent a memorandum to his naval counterparton the Canadian Military Interdepartmental Committee repeating that theinternees were Russian socialists with "10,000 dollars subscribed by socialistsand Germans." The concluding paragraph stated: "On the other hand thereare those who declare that an act of high-handed injustice has been done." Then on April 16, Vice Admiral C . E. Kingsmill, director of the Naval Service,took Gwatkin's intervention at face value. In a letter to Captain Makins, thenaval control officer at Halifax, he stated, "The Militia authorities request thata dec ision as to their (that is, the six Russians) disposal may be hastened." Acopy of this instruction was relayed to Gwatkin who in turn informed DeputyPostmaster General Coulter. Three days later Gwatkin applied pressure. In amemorandum of April 20 to the naval sec retary, he wrote, "Can you say,please, whether or not the Naval Control Office has given a decision?"

On the same day (April 20) Captain Makins wrote Admiral Kingsmill explaininghis reasons for removing Trotsky; he refused to be pressured into making adecision, stating, "I will cable to the Admiralty informing them that the Militiaauthorities are requesting an early decision as to their disposal." However, thenext day, April 21, Gwatkin wrote Coulter: "Our friends the Russian socialistsare to be released; and arrangements are being made for their passage toEurope." The order to Makins for Trotsky's release originated in the Admiralty,

London. Coulter acknowledged the information, "which will please our New York correspondents immensely."

While we can, on the one hand, conclude that Coulter and Gwatkin wereintensely interested in the release of Trotsky, we do not, on the other hand,know why. There was little in the career of either Deputy Postmaster GeneralCoulter or Major General Gwatkin that would explain an urge to release theMenshevik Leon Trotsky.

Dr. Robert Miller Coulter was a medica l doctor of Scottish and Irish parents, aliberal, a Freemason, and an Odd Fellow. He was appointed deputy

postmaster general of Canada in 1897. His sole c laim to fame derived frombeing a delegate to the Universal Postal Union C onvention in 1906 and adelegate to New Zealand and Australia in 1908 for the "All Red" project. AllRed had nothing to do with Red revolutionaries; it was only a plan for all-redor all-British fast steamships between Great Britain, Canada, and Australia.

Major General Willoughby Gwatkin stemmed from a long British militarytradition (Cambridge and then Staff College). A specialist in mobilization, he

19



served in Canada from 1905 to 1918. Given only the documents in theCanadian files, we can but conclude that their intervention in behalf of Trotsky is a mystery.

CANADIAN MILITARY INTELLIGENCE VIEWS TROTSKY

We can approach the Trotsky release case from another angle: Canadianintelligence. Lieutenant Colonel J ohn Bayne MacLean, a prominentCanadian publisher and businessman, founder and president of MacLeanPublishing Company, Toronto, operated numerous Canadian trade journals,including the Financial Post. MacLean also had a long-time association withCanadian Army Intelligence.18

In 1918 Colonel MacLean wrote for his own MacLean's magazine an articleentitled "Why Did We Let Trotsky Go? How Canada Lost an Opportunity toShorten the War."19 The article contained detailed and unusual informationabout Leon Trotsky, although the last half of the piece wanders off into spaceremarking about barely related matters. We have two clues to theauthenticity of the information. First, Colonel MacLean was a man of integritywith excellent connections in Canadian government intelligence. Second,government records since released by Canada, Great Britain, and the UnitedStates confirm MacLean's statement to a significant degree. Some MacLeanstatements remain to be confirmed, but information available in the early1970s is not necessarily inconsistent with Colonel MacLean's article.

MacLean's opening argument is that "some C anadian politicians or officialswere chiefly responsible for the prolongation of the war [World War I], for thegreat loss of life, the wounds and sufferings of the winter of 1917 and thegreat drives of 1918."

Further, states MacLean, these persons were (in 1919)doing everythingpossible to prevent Parliament and the Canadian people from getting therelated facts. Official reports, including those of Sir Douglas Haig,demonstrate that but for the Russian break in 1917 the war would have beenover a year earlier, and that "the man chiefly responsible for the defection of Russia was Trotsky... ac ting under German instructions."

Who was Trotsky? According to MacLean, Trotsky was not Russian, butGerman. Odd as this assertion may appear it does coincide with other scrapsof intelligence information: to wit, that Trotsky spoke better German thanRussian, and that he was the Russian executive of the German "Black Bond."According to MacLean, Trotsky in August 1914 had been "ostentatiously"expelled from Berlin;20 he finally arrived in the United States where heorganized Russian revolutionaries, as well as revolutionaries in Western

20



Canada, who "were largely Germans and Austrians traveling as Russians."MacLean continues:

Originally the British found through Russian associates that Kerensky,21 Leninand some lesser leaders were practically in German pay as early as 1915 and

they uncovered in 1916 the connec tions with Trotsky then living in New York.From that time he was closely watched by... the Bomb Squad. In the earlypart of 1916 a German official sailed for New York. British Intelligence officialsaccompanied him. He was held up at Halifax; but on their instruction he waspassed on with profuse apologies for the necessary delay. After muchmanoeuvering he arrived in a dirty little newspaper office in the slums andthere found Trotsky, to whom he bore important instructions. From J une 1916,until they passed him on [to] the British, the N.Y. Bomb Squad never lost touchwith Trotsky. They discovered that his real name was Braunstein and that hewas a German, not a Russian.22

Such German activity in neutral countries is confirmed in a State Departmentreport (316-9-764-9) describing organization of Russian refugees forrevolutionary purposes.

Continuing, MacLean states that Trotsky and four assoc iates sailed on the"S.S. Christiania" (sic), and on April 3 reported to "Captain Making" (sic) andwere taken off the ship at Halifax under the direc tion of Lieutenant Jones.(Ac tually a party of nine, including six men, were taken off the S.S.Kristianiafjord. The name of the naval control officer at Halifax was CaptainO. M. Makins, R.N. The name of the officer who removed the Trotsky partyfrom the ship is not in the Canadian government documents; Trotsky said itwas "Machen.") Again, according to MacLean, Trotsky's money came "fromGerman sources in New York." Also:

generally the explanation given is that the release was done at the request of Kerensky but months before this British officers and one C anadian serving inRussia, who could speak the Russian language, reported to London andWashington that Kerensky was in German service.23

Trotsky was released "at the request of the British Embassy at Washington . . .[which] acted on the request of the U.S. State Department, who were actingfor someone else." Canadian officials "were instructed to inform the press that Trotsky was an American citizen travelling on an American passport; that hisrelease was specially demanded by the Washington State Department."Moreover, writes MacLean, in Ottawa "Trotsky had, and continues to have,strong underground influence. There his power was so great that orders wereissued that he must be given every consideration."

21



The theme of MacLean's reporting is, quite evidently, that Trotsky hadintimate relations with, and probably worked for, the German General Staff.While such relations have been established regarding Lenin — to the extentthat Lenin was subsidized and his return to Russia facilitated by the Germans— it appears certain that Trotsky was similarly aided. The $10,000 Trotsky fund

in New York was from German sources, and a recently declassifieddocument in the U.S. State Department files reads as follows:

March 9, 1918 to: American Consul, Vladivostok from Polk, Acting Secretaryof State, Washington D.C.

For your confidential information and prompt attention: Following issubstance of message of J anuary twelfth from Von Schanz of GermanImperial Bank to Trotsky, quote Consent imperial bank to appropriation fromcredit general staff of five million roubles for sending assistant chief navalcommissioner Kudrisheff to Far East.

This message suggests some liaison between Trotsky and the Germans in J anuary 1918, a time when Trotsky was proposing an alliance with the West. The State Department does not give the provenance of the telegram, onlythat it originated with the War College Staff. The State Department did treatthe message as authentic and acted on the basis of assumed authenticity. Itis consistent with the general theme of Colonel MacLean's article.

TROTSKY'S INTENTIONS AND OBJECTIVES

Consequently, we can derive the following sequence of events: Trotskytraveled from New York to Petrograd on a passport supplied by theintervention of Woodrow Wilson, and with the declared intention to "carryforward" the revolution. The British government was the immediate source of Trotsky's release from Canadian custody in April 1917, but there may wellhave been "pressures." Lincoln Steffens, an American Communist, acted as alink between Wilson and Charles R. Crane and between Crane and Trotsky.Further, while Crane had no official position, his son Richard was confidentialassistant to Secretary of State Robert Lansing, and Crane senior was providedwith prompt and detailed reports on the progress of the Bolshevik Revolution.

Moreover, Ambassador William Dodd (U.S. ambassador to Germany in theHitler era) said that Crane had an active role in the Kerensky phase of therevolution; the Steffens letters confirm that Crane saw the Kerensky phase asonly one step in a continuing revolution.

The interesting point, however, is not so much the communication amongdissimilar persons like Crane, Steffens, Trotsky, and Woodrow Wilson as theexistence of at least a measure of agreement on the procedure to be

22



followed — that is, the Provisional Government was seen as "provisional," andthe "re-revolution" was to follow.

On the other side of the coin, interpretation of Trotsky's intentions should becautious: he was adept at double games. Official documentation clearly

demonstrates contradictory actions. For example, the Division of Far EasternAffairs in the U.S. State Department received on March 23, 1918, two reportsstemming from Trotsky; one is inconsistent with the other. One report, datedMarch 20 and from Moscow, originated in the Russian newspaper Russkoe

Slovo. The report cited an interview with Trotsky in which he stated that anyalliance with the United States was impossible:

The Russia of the Soviet cannot align itself... with capitalistic America for thiswould be a betrayal It is possible that Americans seek such anrapprochement with us, driven by its antagonism towards Japan, but in anycase there can be no question of an alliance by us of any nature with a

bourgeoisie nation.24

The other report, also originating in Moscow, is a message dated March 17,1918, three days earlier, and from Ambassador Francis: "Trotsky requests fiveAmerican officers as inspectors of army being organized for defense alsorequests railroad operating men and equipment."25

This request to the U.S. is of course inconsistent with rejection of an "alliance."

Before we leave Trotsky some mention should be made of the Stalinist showtrials of the 1930s and, in particular, the 1938 accusations and trial of the

"Anti-Soviet bloc of rightists and Trotskyites." These forced parodies of the judicial process, almost unanimously rejected in the West, may throw light on Trotsky's intentions.

The crux of the Stalinist accusation was that Trotskyites were paid agents of international capitalism. K. G. Rakovsky, one of the 1938 defendants, said, orwas induced to say, "We were the vanguard of foreign aggression, of international fascism, and not only in the USSR but also in Spain, China,throughout the world." The summation of the "court" contains the statement,"There is not a single man in the world who brought so much sorrow andmisfortune to people as Trotsky. He is the vilest agent of fascism .... "26

Now while this may be no more than verbal insults routinely traded amongthe international Communists of the 1930s and 40s, it is also notable that thethreads behind the self-accusation are consistent with the evidence in thischapter. And further, as we shall see later, Trotsky was able to generatesupport among international capitalists, who, incidentally, were alsosupporters of Mussolini and Hitler.27

23



So long as we see all international revolutionaries and all internationalcapitalists as implacable enemies of one another, then we miss a crucialpoint — that there has indeed been some operational cooperation betweeninternational capitalists, including fascists. And there is no a priori reason whywe should reject Trotsky as a part of this alliance.

This tentative, limited reassessment will be brought into sharp focus when wereview the story o£ Michael Gruzenberg, the chief Bolshevik agent inScandinavia who under the alias of Alexander Gumberg was also aconfidential adviser to the Chase National Bank in New York and later toFloyd Odium of Atlas Corporation. This dual role was known to and acceptedby both the Soviets and his American employers. The Gruzenberg story is acase history of international revolution allied with international capitalism.

Colonel MacLean's observations that Trotsky had "strong undergroundinfluence" and that his "power was so great that orders were issued that he

must be given every consideration" are not at all inconsistent with theCoulter-Gwatkin intervention in Trotsky's behalf; or, for that matter, with thoselater occurrences, the Stalinist accusations in the Trotskyite show trials of the1930s. Nor are they inconsistent with the Gruzenberg case. On the otherhand, the only known direc t link between Trotsky and international banking isthrough his cousin Abram Givatovzo, who was a private banker in Kiev beforethe Russian Revolution and in Stockholm after the revolution. While Givatovzoprofessed antibolshevism, he was in fact acting in behalf of the Soviets in1918 in currency transactions.28

Is it possible an international web (:an be spun from these events? First there's Trotsky, a Russian internationalist revolutionary with German connections whosparks assistance from two supposed supporters of Prince Lvov's governmentin Russia (Aleinikoff and Wolf, Russians resident in New York). These two ignitethe action of a liberal Canadian deputy postmaster general, who in turnintercedes with a prominent British Army major general on the Canadianmilitary staff. These are all verifiable links.

In brief, allegiances may not always be what they are called, or appear. Wecan, however, surmise that Trotsky, Aleinikoff, Wolf, Coulter, and Gwatkin inacting for a common limited objective also had some common higher goal

than national allegiance or political label. To emphasize, there is no absoluteproof that this is so. It is, at the moment, only a logical supposition from thefacts. A loyalty higher than that forged by a common immediate goal needhave been no more than that of friendship, although that strains theimagination when we ponder such a polyglot combination. It may also havebeen promoted by other motives. The picture is yet incomplete.

24



Footnotes:

1Leon Trotsky, My Life (New York: Scribner's, 1930), chap. 22.

2 J oseph Nedava, Trotsky and the J ews (Philadelphia: J ewish Publication

Society of America, 1972), p. 163.

3United States, Senate, Brewing and Liquor Interests and German and

Bolshevik Propaganda (Subcommittee on the J udiciary), 65th Cong., 1919.

4Special Report No. 5, The Russian Soviet Bureau in the United States, J uly 14,

1919, Scotland House, London S.W.I. Copy in U.S. State Dept. Decimal File,316-23-1145.

5New York Times, March 5, 1917.

6Lewis Corey, House of Morgan: A Social Biography of the Masters of Money

(New York: G. W. Watt, 1930).

7Morris Hillquit. (formerly Hillkowitz) had been defense attorney for J ohann

Most, alter the assassination of President McKinley, and in 1917 was a leaderof the New York Socialist Party. In the 1920s Hillquit established himself in theNew York banking world by becoming a director of, and attorney for, theInternational Union Bank. Under President Franklin D. Roosevelt, Hillquit helpeddraw up the NRA codes for the garment industry.

8New York Times, March 16, 1917.

9U.S. State Dept. Decimal File, 316-85-1002.

10Ibid.

11Ibid., 861.111/315.

12Lincoln Steffens, Autobiography (New York: Harcourt, Brace, 1931), p. 764.

Steffens was the "go-between" for Crane and Woodrow Wilson.

13William Edward Dodd, Ambassador Dodd's Diary, 1933-1938 (New York:

Harcourt, Brace, 1941), pp. 42-43.

14Lincoln Steffens, The Letters of Lincoln Steffens (New York: Harcourt, Brace,

1941), p. 396.

25



15U.S. State Dept. Decimal File, 861.00/1026.

16 This section is based on Canadian government records.

17

Gwatkin's memoramada in the Canadian government files are not signed,but initialed with a cryptic mark or symbol. The mark has been identified asGwatkin's because one Gwatkin letter (that o[ April 21) with that cryptic markwas acknowledged.

18H.J . Morgan, Canadian Men and Women of the Times, 1912, 2 vols.

(Toronto: W. Briggs, 1898-1912).

19 J une 1919, pp. 66a-666. Toronto Public Library has a copy; the issue of

MacLean's in which Colonel MacLean's article appeared is not easy to findand a frill summary is provided below.

20See also Trotsky, My Life, p. 236.

21See Appendix 3.

22According to his own account, Trotsky did not arrive in the U.S. until J anuary

1917. Trotsky's real name was Bronstein; he invented the name "Trotsky.""Bronstein" is German and "Trotsky" is Polish rather than Russian. His first name isusually given as "Leon"; however, Trotsky's first book, which was published inGeneva, has the initial "N," not "L."

23See Appendix 3; this document was obtained in 1971 from the British Foreign

Office but apparently was known to MacLean.



26Report of Court Proceedings in the Case of the Anti-Soviet "Bloc of Rightists

and Trotskyites" Heard Before the Military Collegium of the Supreme Court of

the USSR (Moscow: People's Commissariat of J ustice of the USSR, 1938), p.293.

27See p. 174. Thomas Lamont of the Morgans was an early supporter of

Mussolini.

28See p. 122.

26

http://reformed-theology.org/html/books/bolshevik_revolution/appendix_03.htm






Chapter III

LENIN AND GERMAN ASSISTANCE FOR

THE BOLSHEVIK REVOLUTIONIt was not until the Bolsheviks had received from us a steady flow of fundsthrough various channels and under varying labels that they were in aposition to be able to build up their main organ Pravda, to conduct energeticpropaganda and appreciably to extend the originally narrow base of theirparty.

Von Kühlmann, minister of foreign affairs, to the kaiser, December 3, 1917

In April 1917 Lenin and a party of 32 Russian revolutionaries, mostly Bolsheviks, journeyed by train from Switzerland across Germany through Sweden toPetrograd, Russia. They were on their way to join Leon Trotsky to "completethe revolution." Their trans-Germany transit was approved, facilitated, andfinanced by the German General Staff. Lenin's transit to Russia was part of aplan approved by the German Supreme Command, apparently notimmediately known to the kaiser, to aid in the disintegration of the Russianarmy and so eliminate Russia from World War I. The possibility that theBolsheviks might be turned against Germany and Europe did not occur to theGerman General Staff. Major General Hoffman has written, "We neither knew

nor foresaw the danger to humanity from the consequences of this journey of the Bolsheviks to Russia."1

At the highest level the German political officer who approved Lenin's journey to Russia was Chancellor Theobald von Bethmann-Hollweg, adescendant of the Frankfurt banking family Bethmann, which achieved greatprosperity in the nineteenth century. Bethmann-Hollweg was appointedchancellor in 1909 and in November 1913 became the subject of the firstvote of censure ever passed by the German Reichstag on a chancellor. Itwas Bethmann-Hollweg who in 1914 told the world that the Germanguarantee to Belgium was a mere "scrap of paper." Yet on other war matters— such as the use of unrestricted submarine warfare — Bethmann-Hollwegwas ambivalent; in J anuary 1917 he told the kaiser, "I can give Your Majestyneither my assent to the unrestricted submarine warfare nor my refusal." By1917 Bethmann-Hollweg had lost the Reichstag's support and resigned — butnot before approving transit of Bolshevik revolutionaries to Russia. The transitinstructions from Bethmann-Hollweg went through the state secretary ArthurZimmermann — who was immediately under Bethmann-Hollweg and who

27



handled day-to-day operational details with the German ministers in bothBern and Copenhagen — to the German minister to Bern in early April 1917. The kaiser himself was not aware of the revolutionary movement until afterLenin had passed into Russia.

While Lenin himself did not know the precise source of the assistance, hecertainly knew that the German government was providing some funding. There were, however, intermediate links between the German foreign ministryand Lenin, as the following shows:

LENIN'S TRANSFER TO RUSSIA IN APRIL 1917

Final dec ision BETHMANN-HOLLWEG (Chancellor)

Intermediary I ARTHUR ZIMMERMANN (State Secretary)

Intermediary II BROCKDORFF-RANTZAU (German Minister inCopenhagen)

Intermediary III ALEXANDER ISRAEL HELPHAND (alias PARVUS)

Intermediary IV J ACOB FURSTENBERG (alias GANETSKY) LENIN, inSwitzerland

From Berlin Zimmermann and Bethmann-Hollweg communicated with the

German minister in Copenhagen, Brockdorff-Rantzau. In turn, Brockdorff-Rantzau was in touch with Alexander Israel Helphand (more commonlyknown by his alias, Parvus), who was located in Copenhagen.2 Parvus wasthe connection to J acob Furstenberg, a Pole descended from a wealthyfamily but better known by his alias, Ganetsky. And J acob Furstenberg wasthe immediate link to Lenin.

Although Chancellor Bethmann-Hollweg was the final authority for Lenin'stransfer, and although Lenin was probably aware of the German origins of the assistance, Lenin cannot be termed a German agent. The GermanForeign Ministry assessed Lenin's probable actions in Russia as being

consistent with their own objectives in the dissolution of the existing powerstructure in Russia. Yet both parties also had hidden objectives: Germanywanted priority access to the postwar markets in Russia, and Lenin intendedto establish a Marxist dictatorship.

The idea of using Russian revolutionaries in this way can be traced back to1915. On August 14 of that year, Brockdorff-Rantzau wrote the German stateundersecretary about a conversation with Helphand (Parvus), and made a

28



strong recommendation to employ Helphand, "an extraordinarily importantman whose unusual powers I feel we must employ for duration of the war ...."3 Included in the report was a warning: "It might perhaps be risky to want touse the powers ranged behind Helphand, but it would certainly be anadmission of our own weakness if we were to refuse their services out of fear

of not being able to direct them."4

Brockdorff-Rantzau's ideas of directing or controlling the revolutionariesparallel, as we shall see, those of the Wall Street financiers. It was J .P. Morganand the American International Corporation that attempted to control bothdomestic and foreign revolutionaries in the United States for their ownpurposes.

A subsequent document5 outlined the terms demanded by Lenin, of whichthe most interesting was point number seven, which allowed "Russian troopsto move into India"; this suggested that Lenin intended to continue the tsarist

expansionist program. Zeman also records the role of Max Warburg inestablishing a Russian publishing house and adverts to an agreement datedAugust 12, 1916, in which the German industrialist Stinnes agreed tocontribute two million rubles for financing a publishing house in Russia.6

Consequently, on April 16, 1917, a trainload of thirty-two, including Lenin, hiswife Nadezhda Krupskaya, Grigori Zinoviev, Sokolnikov, and Karl Radek, leftthe Central Station in Bern en route to Stockholm. When the party reachedthe Russian frontier only Fritz Plattan and Radek were denied entrance intoRussia. The remainder of the party was allowed to enter. Several months laterthey were followed by almost 200 Mensheviks, including Martov and Axelrod.

It is worth noting that Trotsky, at that time in New York, also had fundstraceable to German sources. Further, Von Kuhlmann alludes to Lenin'sinability to broaden the base of his Bolshevik party until the Germans suppliedfunds. Trotsky was a Menshevik who turned Bolshevik only in 1917. Thissuggests that German funds were perhaps related to Trotsky's change of party label.

THE SISSON DOCUMENTS

In early 1918 Edgar Sisson, the Petrograd representative of the U.S.Committee on Public Information, bought a batch of Russian documentspurporting to prove that Trotsky, Lenin, and the other Bolshevik revolutionarieswere not only in the pay of, but also agents of, the German government.

These documents, later dubbed the "Sisson Documents," were shipped to theUnited States in great haste and sec recy. In Washington, D.C. they were

29



submitted to the National Board for Historical Service for authentication. Twoprominent historians, J . Franklin J ameson and Samuel N. Harper, testified totheir genuineness. These historians divided the Sisson papers into threegroups. Regarding Group I, they concluded:

We have subjected them with great care to all the applicable tests to whichhistorical students are accustomed and . . . upon the basis of theseinvestigations, we have no hesitation in declaring that we see no reason todoubt the genuineness or authenticity of these fifty-three documents.7

The historians were less confident about material in Group II. This group wasnot rejected as. outright forgeries, but it was suggested that they were copiesof original documents. Although the historians made "no confidentdeclaration" on Group III, they were not prepared to reject the documents asoutright forgeries.

The Sisson Documents were published by the Committee on PublicInformation, whose chairman was George Creel, a former contributor to thepro-Bolshevik Masses. The American press in general accepted thedocuments as authentic. The notable exception was the New York Evening

Post, at that time owned by Thomas W. Lamont, a partner in the Morgan firm.When only a few installments had been published, the Post challenged theauthenticity of all the documents.8

We now know that the Sisson Documents were almost all forgeries: only oneor two of the minor German circulars were genuine. Even casual examinationof the German letterhead suggests that the forgers were unusually careless

forgers perhaps working for the gullible American market. The German textwas strewn with terms verging on the ridiculous: for example, Bureau insteadof the German word Büro; Central for the German Zentral; etc.

That the documents are forgeries is the conclusion of an exhaustive study byGeorge Kennan9 and of studies made in the 1920s by the British government.Some documents were based on authentic information and, as Kennanobserves, those who forged them certainly had access to some unusuallygood information. For example, Documents 1, 54, 61, and 67 mention thatthe Nya Banken in Stockholm served as the conduit for Bolshevik funds fromGermany. This conduit has been confirmed in more reliable sources.Documents 54, 63, and 64 mention Furstenberg as the banker-intermediarybetween the Germans and the Bolshevists; Furstenberg's name appearselsewhere in authentic documents. Sisson's Document 54 mentions Olof Aschberg, and Olof Aschberg by his own statements was the "BolshevikBanker." Aschberg in 1917 was the director of Nya Banken. Other documentsin the Sisson series list names and institutions, such as the German Naptha-Industrial Bank, the Disconto Gesellschaft, and Max Warburg, the Hamburg

30



banker, but hard supportive evidence is more elusive. In general, the SissonDocuments, while themselves outright forgeries, are nonetheless based partlyon generally authentic information.

One puzzling aspect in the light of the story in this book is that the documents

came to Edgar Sisson from Alexander Gumberg (alias Berg, real nameMichael Gruzenberg), the Bolshevik agent in Scandinavia and later aconfidential assistant to Chase National Bank and Floyd Odium of AtlasCorporation. The Bolshevists, on the other hand, stridently repudiated theSisson material. So did J ohn Reed, the American representative on theexecutive of the Third International and whose paycheck came fromMetropolitan magazine, which was owned by J .P. Morgan interests.10 So did Thomas Lamont, the Morgan partner who owned the New York Evening Post.

There are several possible explanations. Probably the connections betweenthe Morgan interests in New York and such agents as J ohn Reed andAlexander Gumberg were highly flexible. This could have been a Gumbergmaneuver to discredit Sisson and C reel by planting forged documents; orperhaps Gumberg was working in his own interest.

The Sisson Documents "prove" exclusive German involvement with theBolsheviks. They also have been used to "prove" a J ewish-Bolshevikconspiracy theory along the lines of that of the Protocols of Zion. In 1918 theU.S. government wanted to unite American opinion behind an unpopularwar with Germany, and the Sisson Documents dramatically "proved" theexclusive complicity of Germany with the Bolshevists. The documents alsoprovided a smoke screen against public knowledge of the events to be

described in this book.

THE TUG-OF-WAR IN WASHINGTON11

A review of documents in the State Department Decimal File suggests thatthe State Department and Ambassador Francis in Petrograd were quite wellinformed about the intentions and progress of the Bolshevik movement. In thesummer of 1917, for example, the State Department wanted to stop thedeparture from the U.S. of "injurious persons" (that is, returning Russianrevolutionaries) but was unable to do so because they were using newRussian and American passports. The preparations for the BolshevikRevolution itself were well known at least six weeks before it came about.One report in the State Department files states, in regard to the Kerenskyforces, that it was "doubtful whether government . . . [can] suppressoutbreak." Disintegration of the Kerensky government was reportedthroughout September and October as were Bolshevik preparations for acoup. The British government warned British residents in Russia to leave at

31



least six weeks before the Bolshevik phase of the revolution.

The first full report of the events of early November reached Washington onDecember 9, 1917. This report described the low-key nature of the revolutionitself, mentioned that General William V. J udson had made an unauthorized

visit to Trotsky, and pointed out the presence of Germans in Smolny — theSoviet headquarters.

On November 28, 1917, President Woodrow Wilson ordered no interferencewith the Bolshevik Revolution. This instruction was apparently in response to arequest by Ambassador Francis for an Allied conference, to which Britain hadalready agreed. The State Department argued that such a conference wasimprac tical. There were discussions in Paris between the Allies and ColonelEdward M. House, who reported these to Woodrow Wilson as "long andfrequent discussions on Russia." Regarding such a conference, House statedthat England was "passively willing," France "indifferently against," and Italy

"actively so." Woodrow Wilson, shortly thereafter, approved a cable authoredby Secretary of State Robert Lansing, which provided financial assistance forthe Kaledin movement (December 12, 1917). There were also rumors filteringinto Washington that "monarchists working with the Bolsheviks and samesupported by various occurrences and circumstances"; that the Smolnygovernment was absolutely under control of the German General Staff; andrumors elsewhere that "many or most of them [that is, Bolshevists] are fromAmerica."

In December, General Judson again visited Trotsky; this was looked upon as astep towards recognition by the U.S., although a report dated February 5,1918, from Ambassador Francis to Washington, recommended againstrecognition. A memorandum originating with Basil Miles in Washingtonargued that "we should deal with all authorities in Russia including Bolsheviks."And on February 15, 1918, the State Department cabled Ambassador Francisin Petrograd, stating that the "department desires you gradually to keep insomewhat closer and informal touch with the Bolshevik authorities using suchchannels as will avoid any official recognition."

The next day Secretary of State Lansing conveyed the following to the Frenchambassador J . J . J usserand in Washington: "It is considered inadvisable to

take any action which will antagonize at this time any of the various elementsof the people which now control the power in Russia .... "12

On February 20, Ambassador Francis cabled Washington to report theapproaching end of the Bolshevik government. Two weeks later, on March 7,1918, Arthur Bullard reported to Colonel House that German money wassubsidizing the Bolsheviks and that this subsidy was more substantial thanpreviously thought. Arthur Bullard (of the U.S. Committee on Public

32



Information) argued: "we ought to be ready to help any honest nationalgovernment. But men or money or equipment sent to the present rulers of Russia will be used against Russians at least as much as against Germans."13

This was followed by another message from Bullard to Colonel House: "I

strongly advise against giving material help to the present Russiangovernment. Sinister elements in Soviets seem to be gaining control."

But there were influential counterforces at work. As early as November 28,1917, Colonel House cabled President Woodrow Wilson from Paris that it was"exceedingly important" that U.S. newspaper comments advocating that"Russia should be treated as an enemy" be "suppressed." Then next monthWilliam Franklin Sands, executive secretary of the Morgan-controlledAmerican International Corporation and a friend of the previously mentionedBasil Miles, submitted a memorandum that described Lenin and Trotsky asappealing to the masses and that urged the U.S. to recognize Russia. Even

American socialist Walling complained to the Department of State about thepro-Soviet attitude of George Creel (of the U.S. Committee on PublicInformation), Herbert Swope, and William Boyce Thompson (of the FederalReserve Bank of New York).

On December 17, 1917, there appeared in a Moscow newspaper an attackon Red Cross colonel Raymond Robins and Thompson, alleging a linkbetween the Russian Revolution and American bankers:

Why are they so interested in enlightenment? Why was the money given thesocialist revolutionaries and not to the constitutional democrats? One would

suppose the latter nearer and dearer to hearts of bankers.

The article goes on to argue that this was because American capital viewedRussia as a future market and thus wanted to get a firm foothold. The moneywas given to the revolutionaries because

the backward working men and peasants trust the social revolutionaries. Atthe time when the money was passed the social revolutionaries were inpower and it was supposed they would remain in control in Russia for sometime.

Another report, dated December 12, 1917, and relating to Raymond Robins,details "negotiation with a group of American bankers of the American RedCross Mission"; the "negotiation" related to a payment of two million dollars.On J anuary 22, 1918, Robert L Owen, chairman of the U.S. Senate Committeeon Banking and Currency and linked to Wall Street interests, sent a letter toWoodrow Wilson recommending de facto recognition of Russia, permissionfor a shipload of goods urgently needed in Russia, the appointment of representatives to Russia to offset German influence, and the establishment

33



of a career-service group in Russia.

This approach was consistently aided by Raymond Robins in Russia. Forexample, on February 15, 1918, a cable from Robins in Petrograd to Davisonin the Red Cross in Washington (and to be forwarded to William Boyce

Thompson) argued that support be given to the Bolshevik authority for as longas possible, and that the new revolutionary Russia will turn to the United Statesas it has "broken with the German imperialism." According to Robins, theBolsheviks wanted United States assistance and cooperation together withrailroad reorganization, because "by generous assistance and technicaladvice in reorganizing commerce and industry America may entirely excludeGerman commerce during balance of war."

In brief, the tug-of-war in Washington reflected a struggle between, on oneside, old-line diplomats (such as Ambassador Francis) and lower-leveldepartmental officials, and, on the other, financiers like Robins, Thompson,

and Sands with allies such as Lansing and Miles in the State Department andSenator Owen in the Congress.

Footnotes:

1Max Hoffman, War Diaries and Other Papers (London: M. Secker, 1929),

2:177.

2Z. A. B. Zeman and W. B. Scharlau, The Merchant of Revolution.. The Life of

A1exander Israel Helphand (Parvus), 1867-1924 (New York: Oxford UniversityPress, 1965).

3Z. A. B. Zeman, Germany and the Revolution in Russia, 1915-1918. Documents

from the Archives of the German Foreign Ministry (London: Oxford UniversityPress, 1958), p. ????5.

4Ibid.

5Ibid., p. 6, doc. 6, reporting a conversation with the Fstonian intermediary

Keskula.6Ibid., p. 92, n. 3.

7U.S., Committee on Public Information, The German-Bolshevik Conspiracy,

War Information Series, no. 20, October 1918.

8New York Evening Post, September 16-18, 21; October 4, 1918. It is also

34



interesting, but not conclusive of anything, that the Bolsheviks also stoutlyquestioned the authenticity of the documents.

9George F. Kennan, "The Sisson Documents," J ournal of Modern History 27-28

(1955-56): 130-154.

10 J ohn Reed, The Sisson Documents(New York: Liberator Publishing, n.d.).

11 This part is based on section 861.00 o[ the U.S. State Dept. Decimal File, also

available as National Archives rolls 10 and 11 of microcopy 316.

12U.S. State Dept. Dec imal File, 861.00/1117a. The same message was

conveyed to the Italian ambassador.

13See Arthur Bullard papers at Princeton University.

35



Chapter IV

WALL STREET AND WORLD REVOLUTION

What you Radicals and we who hold opposing views differ about, is not somuch the end as the means, not so much what should be brought about ashow it should, and can, be brought about ....

Otto H. Kahn, director, American International Corp., and partner, Kuhn,

Loeb & Co., speaking to the League/or Industrial Democracy, New York,

December 30, 1924

Before World War I, the financial and business structure of the United Stateswas dominated by two conglomerates: Standard Oil, or the Rockefellerenterprise, and the Morgan complex of industries — finance andtransportation companies. Rockefeller and Morgan trust alliances dominatednot only Wall Street but, through interlocking directorships, almost the entireeconomic fabric of the United States.l Rockefeller interests monopolized thepetroleum and allied industries, and controlled the copper trust, the smelterstrust, and the gigantic tobacco trust, in addition to having influence in someMorgan properties such as the U.S. Steel Corporation as well as in hundreds of smaller industrial trusts, public service operations, railroads, and bankinginstitutions. National City Bank was the largest of the banks influenced byStandard Oil-Rockefeller, but financial control extended to the United States

Trust Company and Hanover National Bank as well as to major life insurancecompanies — Equitable Life and Mutual of New York.

The great Morgan enterprises were in steel, shipping, and the electricalindustry; they included General Elec tric, the rubber trust, and railroads. LikeRockefeller, Morgan controlled financial corporations — the National Bank of Commerce and the Chase National Bank, New York Life Insurance, and theGuaranty Trust Company. The names J .P. Morgan and Guaranty TrustCompany occur repeatedly throughout this book. In the early part of thetwentieth century the Guaranty Trust Company was dominated by theHarriman interests. When the elder Harriman (Edward Henry) died in 1909,Morgan and associates bought into Guaranty Trust as well as into Mutual Lifeand New York Life. In 1919 Morgan also bought control of Equitable Life, andthe Guaranty Trust Company absorbed an additional six lesser trustcompanies. Therefore, at the end of World War I the Guaranty Trust andBankers Trust were, respec tively, the first and second largest trust companiesin the United States, both dominated by Morgan interests.2

36



American financiers associated with these groups were involved in financingrevolution even before 1917. Intervention by the Wall Street law firm of Sullivan & Cromwell into the Panama Canal controversy is recorded in 1913congressional hearings. The episode is summarized by Congressman Rainey:

It is my contention that the representatives of this Government [United States]made possible the revolution on the isthmus of Panama. That had it not beenfor the interference of this Government a successful revolution could notpossibly have occurred, and I contend that this Government violated thetreaty of 1846. I will be able to produce evidence to show that thedeclaration of independence which was promulgated in Panama on the 3rdday of November, 1903, was prepared right here in New York City andcarried down there — prepared in the office of Wilson (sic) Nelson Cromwell....3

Congressman Rainey went on to state that only ten or twelve of the top

Panamanian revolutionists plus "the officers of the Panama Railroad &Steamship Co., who were under the control of William Nelson Cromwell, of New York and the State Department officials in Washington," knew about theimpending revolution.4 The purpose of the revolution was to depriveColombia, of which Panama was then a part, of $40 million and to acquirecontrol of the Panama Canal.

The best-documented example of Wall Street intervention in revolution is theoperation of a New York syndicate in the Chinese revolution of 1912, whichwas led by Sun Yat-sen. Although the final gains of the syndicate remainunclear, the intention and role of the New York financing group are fullydocumented down to amounts of money, information on affiliated Chinesesecret soc ieties, and shipping lists of armaments to be purchased. The New York bankers syndicate for the Sun Yat-sen revolution included Charles B. Hill,an attorney with the law firm of Hunt, Hill & Betts. In 1912 the firm was locatedat 165 Broadway, New York, but in 1917 it moved to 120 Broadway (seechapter eight for the significance of this address). Charles B. Hill was direc torof several Westinghouse subsidiaries, including Bryant Electric, Perkins ElectricSwitch, and Westinghouse Lamp — all affiliated with Westinghouse Elec tricwhose New York office was also located at 120 Broadway. Charles R. Crane,organizer of Westinghouse subsidiaries in Russia, had a known role in the first

and second phases of the Bolshevik Revolution (see page 26).

The work of the 1910 Hill syndicate in China is recorded in the LaurenceBoothe Papers at the Hoover Institution.5 These papers contain over 110related items, including letters of Sun Yat-sen to and from his Americanbackers. In return for financial support, Sun Yat-sen promised the Hillsyndicate railroad, banking, and commercial concessions in the newrevolutionary China.

37



Another case of revolution supported by New York financial institutionsconcerned that of Mexico in 1915-16. Von Rintelen, a German espionageagent in the United States,6 was accused during his May 1917 trial in New YorkCity of attempting to "embroil" the U.S. with Mexico and J apan in order todivert ammunition then flowing to the Allies in Europe.7 Payment for the

ammunition that was shipped from the United States to the Mexicanrevolutionary Pancho Villa, was made through Guaranty Trust Company. VonRintelen's adviser, Sommerfeld, paid $380,000 via Guaranty Trust andMississippi Valley Trust Company to the Western Cartridge Company of Alton,Illinois, for ammunition shipped to El Paso, for forwarding to Villa. This was inmid-1915. On J anuary 10, 1916, Villa murdered seventeen American miners atSanta Isabel and on March 9, 1916, Villa raided Columbus, New Mexico, andkilled eighteen more Americans.

Wall Street involvement in these Mexican border raids was the subject of aletter (October 6, 1916) from Lincoln Steffens, an American Communist, toColonel House, an aide' to Woodrow Wilson:

My dear Colonel House:

J ust before I left New York last Monday, I was told convincingly that "WallStreet" had completed arrangements for one more raid of Mexican banditsinto the United States: to be so timed and so atroc ious that it would settle theelection ....8

Once in power in Mexico, the Carranza government purchased additionalarms in the United States. The American Gun Company contracted to ship

5,000 Mausers and a shipment license was issued by the War Trade Board for15,000 guns and 15,000,000 rounds of ammunition. The Americanambassador to Mexico, Fletcher, "flatly refused to recommend or sanctionthe shipment of any munitions, rifles, etc., to Carranza."9 However,intervention by Secretary of State Robert Lansing reduced the barrier to oneof a temporary delay, and "in a short while . . . [the American Gun Company]would be permitted to make the shipment and deliver."10

The raids upon the U.S. by the Villa and the Carranza forces were reported inthe New York Times as the "Texas Revolution" (a kind of dry run for theBolshevik Revolution) and were undertaken jointly by Germans andBolsheviks. The testimony of J ohn A. Walls, district attorney of Brownsville, Texas, before the 1919 Fall Committee yielded documentary evidence of thelink between Bolshevik interests in the United States, German activity, and theCarranza forces in Mexico.11 Consequently, the Carranza government, thefirst in the world with a Soviet-type constitution (which was written by Trotskyites), was a government with support on Wall Street. The Carranzarevolution probably could not have succeeded without American munitions

38



and Carranza would not have remained in power as long as he did withoutAmerican help.12

Similar intervention in the 1917 Bolshevik Revolution in Russia revolves aroundSwedish banker and intermediary Olof Aschberg. Logically the story begins

with prerevolutionary tsarist loans by Wall Street bank syndicates.

AMERICAN BANKERS AND TSARIST LOANS

In August 1914 Europe went to war. Under international law neutral countries(and the United States was neutral until April 1917) could not raise loans forbelligerent countries. This was a question of law as well as morality.

When the Morgan house floated war loans for Britain and France in 1915, J .P.Morgan argued that these were not war loans at all but merely a means of

facilitating international trade. Such a distinction had indeed beenelaborately made by President Wilson in October 1914; he explained that thesale of bonds in the U.S. for foreign governments was in effect a loan of savings to belligerent governments and did not finance a war. On the otherhand, acceptance of Treasury notes or other evidence of debt in paymentfor articles was only a means of facilitating trade and not of financing a wareffort.13

Documents in the State Department files demonstrate that the National CityBank, controlled by Stillman and Rockefeller interests, and the Guaranty Trust,controlled by Morgan interests, jointly raised substantial loans for thebelligerent Russia before U.S. entry into the war, and that these loans wereraised alter the State Department pointed out to these firms that they werecontrary to international law. Further, negotiations for the loans wereundertaken through official U.S. government communications facilities undercover of the top-level "Green Cipher" of the State Department. Below areextracts from State Department cables that will make the case.

On May 94, 1916, Ambassador Francis in Petrograd sent the following cableto the State Department in Washington for forwardin to Frank ArthurVanderlip, then chairman of the National City Bank in New York. The cable

was sent in Green Cipher and was enciphered and deciphered by U.S. StateDepartment officers in Petrograd and Washington at the taxpayers' expense(file 861.51/110).

563, May 94, 1 p.m.

39



For Vanderlip National City Bank New York. Five. Our previous opinions creditstrengthened. We endorse plan cabled as safe investment plus veryattractive speculation in roubles. In view of guarantee of exchange ratehave placed rate somewhat above present market. Owing unfavorableopinion created by long delay have on own responsibility offered take

twenty-five million dollars. We think large portion of all should be retained bybank and allied institutions. With clause respect customs bonds becomepractical lien on more than one hundred and fifty million dollars per annumcustoms making absolute security and secures market even if defect. Weconsider three [years?] option on bonds very valuable and for that reasonamount of rouble credit should be enlarged by group or by distribution toclose friends. American International should take block and we would informGovernment. Think group should be formed at once to take and issue of bonds . . . should secure full cooperation guaranty. Suggest you see J ackpersonally, use every endeavor to get them really work otherwise cooperate

guarantee form new group. Opportunities here during the next ten years verygreat along state and industrial financiering and if this transactionconsummated doubtless should be established. In answering bear in mindsituation regarding cable. MacRoberts Rich.

FRANCIS, AMERICAN AMBASSADOR14

There are several points to note about the above cable to understand thestory that follows. First, note the reference to American InternationalCorporation, a Morgan firm, and a name that turns up again and again inthis story. Second, "guarantee" refers to Guaranty Trust Company. Third,

"MacRoberts" was Samuel MacRoberts, a vice president and the executivemanager of National City Bank.

On May 24, 1916, Ambassador Francis cabled a message from Rolph Marshof Guaranty Trust in Petrograd to Guaranty Trust in New York, again in thespecial Green Cipher and again using the facilities of the State Department. This cable reads as follows:

565, May 24, 6 p.m. for Guaranty Trust Company New York: Three.

Olof and self consider the new proposition takes care Olof and will helprather than harm your prestige. Situation such co-operation necessary if bigthings are to be accomplished here. Strongly urge your arranging with City toconsider and act jointly in all big propositions here. Decided advantages forboth and prevents playing one against other. City representatives here desire(hand written) such co-operation. Proposition being considered eliminatesour credit in name also option but we both consider the rouble credit withthe bond option in propositions. Second paragraph offers wonderfulprofitable opportunity, strongly urge your acceptance. Please cable me full

40



authority to act in connection with City. Consider our entertaining propositionsatisfactory situation for us and permits doing big things. Again strongly urgeyour taking twenty-five million of rouble c redit. No possibility loss and dec idedspeculative advantages. Again urge having Vice President upon the ground.Effect here will be decidedly good. Resident Attorney does not carry same

prestige and weight. This goes through Embassy by code answer same way.See cable on possibilities.

ROLPH MARSH. FRANCIS, AMERICAN AMBASSADOR

Note:—

Entire Message in Green Cipher. TELEGRAPH ROOM15

"Olof" in the cable was Olof Aschberg, Swedish banker and head of the NyaBanken in Stockholm. Aschberg had been in New York in 1915 conferring withthe Morgan firm on these Russian loans. Now, in 1916, he was in Petrogradwith Rolph Marsh of Guaranty Trust and Samuel MacRoberts and Rich of National City Bank ("City" in cable) arranging loans for a Morgan-Rockefellerconsortium. The following year, Aschberg, as we shall see later, would beknown as the "Bolshevik Banker," and his own memoirs reproduce evidenceof his right to the title.

The State Department files also contain a series of cables betweenAmbassador Francis, Acting Secretary Frank Polk, and Secretary of StateRobert Lansing concerning the legality and propriety of transmitting NationalCity Bank and Guaranty Trust cables at public expense. On May 25, 1916,

Ambassador Francis cabled Washington as follows and referred to the twoprevious cables:

569, May 25, one p.m.

My telegram 563 and 565 May twenty-fourth are sent for local representativesof institutions addressed in the hope of consummating loan which wouldlargely increase international trade and greatly benefit [diplomaticrelations?]. Prospect for success promising. Petrograd representativesconsider terms submitted very satisfactory but fear such representations totheir institutions would prevent consummation loan if Government here

acquainted these proposals.

FRANCIS, AMERICAN AMBASSADOR.16

The basic reason cited by Francis for fac ilitating the cables is "the hope of consummating loan which would largely increase international trade." Transmission of commercial messages using State Department facilities hadbeen prohibited, and on J une 1, 1916, Polk cabled Francis:

41



842

In view of Department's regulation contained in its circular telegraphicinstruction of March fifteenth, (discontinuance of forwarding Commercialmessages)17 1915, please explain why messages in your 563, 565 and 575,

should be communicated.

Hereafter please follow closely Department's instructions.

Acting. Polk

861.51/112/110

Then on J une 8, 1916, Secretary of State Lansing expanded the prohibitionand clearly stated that the proposed loans were illegal:

860 Your 563, 565, May 24, g: 569 May 25.1 pm Before delivering messages to

Vanderlip and Guaranty Trust Company, I must inquire whether they refer toRussian Government loans of any description. If they do, I regret that theDepartment can not be a party to their transmission, as such action wouldsubmit it to justifiable criticism because of participation by this Government inloan transaction by a belligerent for the purpose of carrying on its hostileoperations. Such participation is contrary to the accepted rule of international law that neutral Governments should not lend their assistance tothe raising of war loans by belligerents.

The last line of the Lansing cable as written, was not transmitted to Petrograd. The line read: "Cannot arrangements be made to send these messages

through Russian channels?"

How can we assess these cables and the parties involved?

Clearly the Morgan-Rockefeller interests were not interested in abiding byinternational law. There is obvious intent in these cables to supply loans tobelligerents. There was no hesitation on the part of these firms to use StateDepartment facilities for the negotiations. Further, in spite of protests, theState Department allowed the messages to go through. Finally, and mostinteresting for subsequent events, Olof Aschberg, the Swedish banker, was aprominent participant and intermediary in the negotiations on behalf of

Guaranty Trust. Let us therefore take a closer look at Olof Aschberg.

42



OLOF ASCHBERG IN NEW YORK, 1916

Olof Aschberg, the "Bolshevik Banker" (or "Bankier der Weltrevolution," as hehas been called in the German press), was owner of the Nya Banken,founded 1912 in Stockholm. His codirec tors included prominent members of

Swedish cooperatives and Swedish soc ialists, including G. W. Dahl, K. G.Rosling, and C. Gerhard Magnusson.18 In 1918 Nya Banken was placed onthe Allied black-list for its financial operations in behalf of Germany. Inresponse to the blacklisting, Nya Banken changed its name to SvenskEkonomiebolaget. The bank remained under the control of Aschberg, andwas mainly owned by him. The bank's London agent was the British Bank of North Commerce, whose chairman was Earl Grey, former associate of CecilRhodes. Others in Aschberg's interesting c ircle of business assoc iates includedKrassin, who was until the Bolshevik Revolution (when he changed color toemerge as a leading Bolshevik) Russian manager of Siemens-Schukert inPetrograd; Carl Furstenberg, minister of finance in the first Bolshevikgovernment; and Max May, vice president in charge of foreign operations forGuaranty Trust of New York. Olof Aschberg thought so highly of Max May thata photograph of May is included in Aschberg's book.19

In the summer of 1916 Olof Aschberg was in New York representing both NyaBanken and Pierre Bark, the tsarist minister of finance. Aschberg's primebusiness in New York, according to the New York Times (August 4, 1916), wasto negotiate a $50 million loan for Russia with an American banking syndicateheaded by Stillman's National City Bank. This business was conc luded on J une5, 1916; the results were a Russian credit of $50 million in New York at a bank

charge of 7 1/2 percent per annum, and a corresponding 150-million-rublecredit for the NCB syndicate in Russia. The New York syndicate then turnedaround and issued 6 1/2 percent certificates in its own name in the U.S.market to the amount of $50 million. Thus, the NCB syndicate made a profiton the $50 million loan to Russia, floated it on the American market foranother profit, and obtained a 150-million-ruble credit in Russia.

During his New York visit on behalf of the tsarist Russian government,Aschberg made some prophetic comments concerning the future forAmerica in Russia:

The opening for American capital and American initiative, with theawakening brought by the war, will be country-wide when the struggle isover. There are now many Americans in Petrograd, representatives of business firms, keeping in touch with the situation, and as soon as the changecomes a huge American trade with Russia should spring up.20

43



OLOF ASCHBERG IN THE BOLSHEVIK REVOLUTION

While this tsarist loan operation was being floated in New York, Nya Bankenand Olof Aschberg were funneling funds from the German government toRussian revolutionaries, who would eventually bring down the "Kerensky

committee" and establish the Bolshevik regime.

The evidence for Olof Aschberg's intimate connection with financing theBolshevik Revolution comes from several sources, some of greater value thanothers. The Nya Banken and Olof Aschberg are prominently cited in the Sissonpapers (see chapter three); however, George Kennan has systematicallyanalyzed these papers and shown them to be forged, although they areprobably based in part on authentic material. Other evidence originates withColonel B. V. Nikitine, in charge of counterintelligence in the Kerenskygovernment, and consists of twenty-nine telegrams transmitted fromStockholm to Petrograd, and vice versa, regarding financing of the

Bolsheviks. Three of these telegrams refer to banks — telegrams 10 and 11refer to Nya Banken, and telegram 14 refers to the Russo-Asiatic Bank inPetrograd. Telegram 10 reads as follows:

Gisa Furstenberg Saltsjobaden. Funds very low cannot assist if really urgentgive 500 as last payment pencils huge loss original hopeless instruct NyaBanken cable further 100 thousand Sumenson.

Telegram 11 reads:

Kozlovsky Sergievskaya 81. First letters received Nya Banken telegraphed

cable who Soloman offering local telegraphic agency refers to BronckSavelievich Avilov.

Fürstenberg was the intermediary between Parvus (Alexander I. Helphand)and the German government. About these transfers, Michael Futrellconcludes:

It was discovered that during the last few months she [Evegeniya Sumenson]had received nearly a million rubles from Furstenberg through the NyaBanken in Stockholm, and that this money came from German sources.21

Telegram 14 of the Nikitine series reads: "Furstenberg Saltsjöbaden. Number 90period hundred thousand into Russo-Asiatic Sumenson." The U.S.representative for Russo-Asiatic was MacGregor Grant Company at 120Broadway, New York City, and the bank was financed by Guaranty Trust inthe U.S. and Nya Banken in Sweden.

Another mention of the Nya Banken is in the material "The Charges Againstthe Bolsheviks," which was published in the Kerensky period. Particularly

44



noteworthy in that material is a document signed by Gregory Alexinsky, aformer member of the Second State Duma, in reference to monetarytransfers to the Bolsheviks. The document, in part, reads as follows:

In accordance with the information just received these trusted persons in

Stockholm were: the Bolshevik J acob Furstenberg, better known under thename of "Hanecki" (Ganetskii), and Parvus (Dr. Helfand); in Petrograd: theBolshevik attorney, M. U. Kozlovsky, a woman relative of Hanecki —Sumenson, engaged in speculation together with Hanecki, and others.Kozlovsky is the chief receiver of German money, which is transferred fromBerlin through the "Disconto-Gesellschaft" to the Stockholm "Via Bank," andthence to the Siberian Bank in Petrograd, where his account at present has abalance of over 2,000,000 rubles. The military censorship has unearthed anuninterrupted exchange of telegrams of a political and financial naturebetween the German agents and Bolshevik leaders [Stockholm-Petrograd].22

Further, there is in the State Dept. files a Green Cipher message from the U.S.embassy in Christiania (named Oslo, 1925), Norway, dated February 21, 1918,that reads: "Am informed that Bolshevik funds are deposited in Nya Banken,Stockholm, Legation Stockholm advised. Schmedeman."23

Finally, Michael Furtell, who interviewed Olof Aschberg just before his death,concludes that Bolshevik funds were indeed transferred from Germanythrough Nya Banken and J acob Furstenberg in the guise of payment forgoods shipped. According to Futrell, Aschberg confirmed to him thatFurstenberg had a commercial business with Nya Banken and thatFurstenberg had also sent funds to Petrograd. These statements areauthenticated in Aschberg's memoirs (see page 70). In sum, Aschberg,through his Nya Banken, was undoubtedly a channel for funds used in theBolshevik Revolution, and Guaranty Trust was indirectly linked through itsassociation with Aschberg and its interest in MacGregor Grant Co., New York,agent of the Russo-Asiatic Bank, another transfer vehicle.

NYA BANKEN AND GUARANTY TRUST JOIN RUSKOMBANK

Several years later, in the fall of 1922, the Soviets formed their first international

bank. It was based on a syndicate that involved the former Russian privatebankers and some new investment from German, Swedish, American, andBritish bankers. Known as the Ruskombank (Foreign Commercial Bank or theBank of Foreign Commerce), it was headed by Olof Aschberg; its boardconsisted of tsarist private bankers, representatives of German, Swedish, andAmerican banks, and, of course, representatives of the Soviet Union. The U.S.Stockholm legation reported to Washington on this question and noted, in a

45



reference to Aschberg, that "his reputation is poor. He was referred to inDocument 54 of the Sisson documents and Dispatch No. 138 of J anuary 4,1921 from a legation in Copenhagen."24

The foreign banking consortium involved in the Ruskombank represented

mainly British capital. It included Russo-Asiatic Consolidated Limited, whichwas one of the largest private creditors of Russia, and which was granted £3million by the Soviets to compensate for damage to its properties in theSoviet Union by nationalization. The British government itself had alreadypurchased substantial interests in the Russian private banks; according to aState Department report, "The British Government is heavily invested in theconsortium in question."25

The consortium was granted extensive concessions in Russia and the bankhad a share capital of ten million gold rubles. A report in the Danishnewspaper National Titende stated that "possibilities have been created for

cooperation with the Soviet government where this, by political negotiations,would have been impossible."26 In other words, as the newspaper goes on tosay, the politicians had failed to achieve cooperation with the Soviets, but "itmay be taken for granted that the capitalistic exploitation of Russia isbeginning to assume more definite forms."27

In early October 1922 Olof Aschberg met in Berlin with Emil Wittenberg,director of the Nationalbank fur Deutschland, and Scheinmann, head of theRussian State Bank. After discussions concerning German involvement in theRuskombank, the three bankers went to Stockholm and there met with MaxMay, vice president of the Guaranty Trust Company. Max May was thendesignated direc tor of the Foreign Division of the Ruskombank, in addition toSchlesinger, former head of the Moscow Merchant Bank; Kalaschkin, formerhead of the J unker Bank; and Ternoffsky, former head of the Siberian Bank. The last bank had been partly purchased by the British government in 1918.Professor Gustav Cassell of Sweden agreed to act as adviser to Ruskombank.Cassell was quoted in a Swedish newspaper (Svenskadagbladet of October17, 1922) as follows:

That a bank has now been started in Russia to take care of purely bankingmatters is a great step forward, and it seems to me that this bank was

established in order to do something to create a new economic life in Russia.What Russia needs is a bank to create internal and external commerce. If there is to be any business between Russia and other countries there must bea bank to handle it. This step forward should be supported in every way byother countries, and when I was asked my advice I stated that I wasprepared to give it. I am not in favor of a negative policy and believe thatevery opportunity should be seized to help in a positive reconstruction. Thegreat question is how to bring the Russian exchange back to normal. It is a

46



complicated question and will necessitate thorough investigation. To solvethis problem I am naturally more than willing to take part in the work. To leaveRussia to her own resources and her own fate is folly.28

The former Siberian Bank building in Petrograd was used as the head office of

the Ruskombank, whose objectives were to raise short-term loans in foreigncountries, to introduce foreign capital into the Soviet Union, and generally tofacilitate Russian overseas trade. It opened on December 1, 1922, in Moscowand employed about 300 persons.

In Sweden Ruskombank was represented by the Svenska Ekonomibolaget of Stockholm, Olof Aschberg's Nya Banken under a new name, and in Germanyby the Garantie und Creditbank fur Den Osten of Berlin. In the United Statesthe bank was represented by the Guaranty Trust Company of New York. Onopening the bank, Olof Aschberg commented:

The new bank will look after the purchasing of machinery and raw materialfrom England and the United States and it will give guarantees for thecompletion of contracts. The question of purchases in Sweden has not yetarisen, but it is hoped that such will be the case later on.29

On joining Ruskombank, Max May of Guaranty Trust made a similarstatement:

The United States, being a rich country with well developed industries, doesnot need to import anything from foreign countries, but... it is greatlyinterested in exporting its products to other countries and considers Russia the

most suitable market for that purpose, taking into consideration the vastrequirements of Russia in all lines of its economic life.30

May stated that the Russian Commercial Bank was "very important" and thatit would "largely finance a ll lines of Russian industries."

From the very beginning the operations of the Ruskombank were restrictedby the Soviet foreign-trade monopoly. The bank had difficulties in obtainingadvances on Russian goods deposited abroad. Because they weretransmitted in the name of Soviet trade delegations, a great deal of Ruskombank funds were locked up in deposits with the Russian State Bank.

Finally, in early 1924 the Russian Commercial Bank was fused with the Sovietforeign-trade commissariat, and Olof Aschberg was dismissed from hisposition at the bank because, it was claimed in Moscow, he had misusedbank funds. His original connection with the bank was because of hisfriendship with Maxim Litvinov. Through this association, so runs a StateDepartment report, Olof Aschberg had access to large sums of money forthe purpose of meeting payments on goods ordered by Soviets in Europe:

47



These sums apparently were placed in the Ekonomibolaget, a privatebanking company, owned by Mr. Aschberg. It is now alledged [sic] that alarge portion of these funds were employed by Mr. Aschberg for makinginvestments for his personal account and that he is now endeavoring tomaintain his position in the bank through his possession of this money.

According to my informant Mr. Aschberg has not been the sole one to profitby his operations with the Soviet funds, but has divided the gains with thosewho are responsible for his appointment in the Russian Commerce Bank,among them being Litvinoff.31

Ruskombank then became Vneshtorg, by which it is known today.

We now have to retrace our steps and look at the activities of Aschberg'sNew York assoc iate, Guaranty Trust Company, during World War I, to lay thefoundation for examination of its role in the revolutionary era in Russia.

GUARANTY TRUST AND GERMAN ESPIONAGE IN THE UNITED STATES, 1914-191732

During World War I Germany raised considerable funds in New York forespionage and covert operations in North America and South America. It isimportant to record the flow of these funds because it runs from the samefirms — Guaranty Trust and American International Corporation — that wereinvolved in the Bolshevik Revolution and its aftermath. Not to mention thefact (outlined in chapter three) that the German government also financedLenin's revolutionary ac tivities.

A summary of the loans granted by American banks to German interests inWorld War I was given to the 1919 Overman Committee of the United StatesSenate by U.S. Military Intelligence. The summary was based on thedeposition of Karl Heynen, who came to the United States in April 1915 toassist Dr. Albert with the commercial and financial affairs of the Germangovernment. Heynen's official work was the transportation of goods from theUnited States to Germany by way of Sweden, Switzerland, and Holland. Infact, he was up to his ears in covert operations.

The major German loans raised in the United States between 1915 and 1918,

according to Heynen, were as follows: The first loan, of $400,000, was madeabout September 1914 by the investment bankers Kuhn, Loeb & Co.Collateral of 25 million marks was deposited with Max M. Warburg inHamburg, the German affiliate of Kuhn, Loeb & C o. Captain George B. Lesterof U.S. Military Intelligence told the Senate that Heynen's reply to the question"Why did you go to Kuhn, Loeb & Co?" was, "Kuhn, Loeb & Co. weconsidered the natural bankers of the German government and theReichsbank."

48



The second loan, of $1.3 million, did not come directly from the United Statesbut was negotiated by John Simon, an agent of the Suedeutsche Disconto-Gesellschaft, to secure funds for making shipments to Germany.

The third loan was from the Chase National Bank (in the Morgan group) in the

amount of three million dollars. The fourth loan was from the Mechanics andMetals National Bank in the amount of one million dollars. These loansfinanced German espionage activities in the United States and Mexico.Some funds were traced to Sommerfeld, who was an adviser to Von Rintelen(another German espionage agent) and who was later associated withHjalmar Schacht and Emil Wittenberg. Sommerfeld was to purchaseammunition for use in Mexico. He had an account with the Guaranty TrustCompany and from this payments were made to Western Cartridge Co. of Alton, Illinois, for ammunition that was shipped to El Paso for use in Mexico byPancho Villa's bandits. About $400,000 was expended on ammunition,Mexican propaganda, and similar activities.

The then German ambassador Count Von Bernstorff has recounted hisfriendship with Adolph von Pavenstedt, a senior partner of Amsinck & Co.,which was controlled and in November 1917 owned by AmericanInternational Corporation. American International figures prominently in laterchapters; its board of directors contained the key names on Wall Street:Rockefeller, Kahn, Stillman, du Pont, Winthrop, etc. According to VonBernstorff, Von Pavenstedt was "intimately acquainted with all the membersof the Embassy."33 Von Bernstorff himself regarded Von Pavenstedt as one of the most respected, "if not the most respected imperial German in New

York."34 Indeed, Von Pavenstedt was "for many years a Chief pay master of the German spy system in this country."35 In other words, there is no questionthat Armsinck & Co., controlled by American International Corporation, wasintimately associated with the funding of German wartime espionage in theUnited States. To clinch Von Bernstorff's last statement, there exists aphotograph of a check in favor of Amsinck & Co., dated December 8, 1917— just four weeks after the start of the Bolshevik Revolution in Russia — signedVon Papen (another German espionage operator), and having a counterfoilbearing the notation "travelling expenses on Von W [i.e., Von Wedell]." FrenchStrothers,36 who published the photograph, has stated that this check isevidence that Von Papen "became an accessory after the fact to a crimeagainst American laws"; it also makes Amsinck & Co. subjec t to a similarcharge.

Paul Bolo-Pasha, yet another German espionage agent, and a prominentFrench financier formerly in the service of the Egyptian government, arrived inNew York in March 1916 with a letter of introduction to Von Pavenstedt. Through the latter, Bolo-Pasha met Hugo Schmidt, director of the Deutsche

49



Bank in Berlin and its representative in the United States. One of Bolo-Pasha'sprojects was to purchase foreign newspapers so as to slant their editorials infavor of Germany. Funds for this program were arranged in Berlin in the formof credit with Guaranty Trust Company, with the credit subsequently madeavailable to Amsinck & Co. Adolph von Pavenstedt, of Amsinck, in turn made

the funds available to Bolo-Pasha.

In other words, both Guaranty Trust Company and Amsinck & Co., asubsidiary of American International Corporation, were direc tly involved inthe implementation of German espionage and other activities in the UnitedStates. Some links can be established from these firms to each of the majorGerman operators in the U.S. — Dr. Albert, Karl Heynen, Von Rintelen, VonPapan, Count J acques Minotto (see below), and Paul Bolo-Pasha.

In 1919 the Senate Overman Committee a lso established that Guaranty Trusthad an active role in financing German World War I efforts in an "unneutral"

manner. The testimony of the U.S. intelligence officer Becker makes this clear:

In this mission Hugo Schmidt [of Deutsche Bank] was very largely assisted bycertain American banking institutions. It was while we were neutral, but theyacted to the detriment of the British interests, and I have considerable dataon the activity of the Guaranty Trust Co. in that respec t, and would like toknow whether the committee wishes me to go into it.

SENATOR NELSON: That is a branch of the C ity Bank, is it not?

MR. BECKER: No.

SENATOR OVERMAN: If it was inimical to British interests it was unneutral, and Ithink you had better let it come out.

SENATOR KING: Was it an ordinary banking transaction?

MR. BECKER: That would be a matter of opinion. It has to do withcamouflaging exchange so as to make it appear to be neutral exchange,when it was really German exchange on London. As a result of thoseoperations in which the Guaranty Trust Co. mainly participated betweenAugust 1, 1914, and the time America entered the war, the Deutsche Bankein its branches in South America succeeded in negotiating £4,670,000 of London exchange in war time.

SENATOR OVERMAN: I think that is competent.37

What is rea lly important is not so much that financ ial assistance was given toGermany, which was only illegal, as that directors of Guaranty Trust werefinancially assisting the Allies at the same time. In other words, Guaranty Trustwas financing both sides of The conflict. This raises the question of morality.

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THE GUARANTY TRUST-MINOTTO-CAILLAUX THREADS.38

Count J acques Minotto is a most unlikely but verifiable and persistent threadthat links the Bolshevik Revolution in Russia with German banks, GermanWorld War I espionage in the United States, the Guaranty Trust Company in

New York, the abortive French Bolshevik revolution, and the related Caillaux-Malvy espionage trials in France.

J acques Minotto was born February 17, 1891, in Berlin, the son of an Austrianfather descended from Italian nobility, and a German mother. Young Minottowas educated in Berlin and then entered employment with the DeutscheBank in Berlin in 1912. Almost immediately Minotto was sent to the UnitedStates as assistant to Hugo Schmidt, deputy direc tor of the Deutsche Bankand its New York representative. After a year in New York, Minotto was sentby the Deutsche Bank to London, where he circulated in prominent politicaland diplomatic circles. At the outbreak of World War I, Minotto returned tothe United States and immediately met with the German ambassador CountVon Bernstorff, after which he entered the employ of Guaranty TrustCompany in New York. At Guaranty Trust, Minotto was under the direc t ordersof Max May, director of its foreign department and an associate of Swedishbanker Olof Aschberg. Minotto was no minor bank official. The interrogatoriesof the Caillaux trials in Paris in 1919 established that Minotto worked directlyunder Max May.39 On October 25, 1914, Guaranty Trust sent J acques Minottoto South America to make a report on the political, financial, andcommercial situation. As he did in London, Washington, and New York, soMinotto moved in the highest diplomatic and political circles here. One

purpose of Minotto's mission in Latin America was to establish the mechanismby which Guaranty Trust could be used as an intermediary for the previouslymentioned German fund raising on the London money market, which wasthen denied to Germany because of World War I. Minotto returned to theUnited States, renewed his assoc iation with Count Von Bernstorff and CountLuxberg, and subsequently, in 1916, attempted to obtain a position with U.S.Naval Intelligence. After this he was arrested on charges of pro-Germanactivities. When arrested Minotto was working at the Chicago plant of hisfather-in-law Louis Swift, of Swift & Co., meatpackers. Swift put up the securityfor the $50,000 bond required to free Minotto, who was represented by Henry

Veeder, the Swift & Co. attorney. Louis Swift was himself arrested for pro-German activities at a later date. As an interesting and not unimportantcoincidence, "Major" Harold H. Swift, brother of Louis Swift, was a member of the William Boyce Thompson 1917 Red Cross Mission to Petrograd — that is,one of the group of Wall Street lawyers and businessmen whose intimateconnections with the Russian Revolution are to be described later. Helen SwiftNeilson, sister of Louis and Harold Swift, was later connected with the pro-Communist Abraham Lincoln Center "Unity." This established a minor link

51



between German banks, American. banks, German espionage, and, as weshall see later, the Bolshevik Revolution.40

J oseph Caillaux was a famous (sometimes called notorious) French politician.He was also assoc iated with Count Minotto in the latter's Latin America

operations for Guaranty Trust, and was later implicated in the famous Frenchespionage cases of 1919, which had Bolshevik connections. In 1911, Caillauxbecame minister of finance and later in the same year became premier of France. J ohn Louis Malvy became undersecretary of state in the Caillauxgovernment. Several years later Madame Caillaux murdered GastonCalmette, editor of the prominent Paris newspaper Figaro. The prosecutioncharged that Madame Caillaux murdered Calmette to prevent publicationof certain compromising documents. This affair resulted in the departure of Caillaux and his wife from France. The couple went to Latin America andthere met with Count Minotto, the agent of the Guaranty Trust Companywho was in Latin America to establish intermediaries for German finance.Count Minotto was socially connected with the Caillaux couple in Rio de J aneiro and Sao Paulo, Brazil, in Montevideo, Uruguay, and in Buenos Aires,Argentina. In other words, Count Minotto was a constant companion of theCaillaux couple while they were in Latin America.41 On returning to France,Caillaux and his wife stayed at Biarritz as guests of Paul Bolo-Pasha, who was,as we have seen, also a German espionage operator in the United Statesand France.42 Later, in July 1915, Count Minotto arrived in France from Italy,met with the Caillaux couple; the same year the Caillaux couple also visitedBolo-Pasha again in Biarritz. In other words, in 1915 and 1916 Caillauxestablished a continuing soc ial relationship with Count Minotto and Bolo-

Pasha, both of whom were German espionage agents in the United States.

Bolo-Pasha's work in France was to gain influence for Germany in the Parisnewspapers Le Tempsand Figaro. Bolo-Pasha then went to New York, arrivingFebruary 24, 1916. Here he was to negotiate a loan of $2 million — and herehe was associated with Von Pavenstedt, the prominent German agent withAmsinck & Co.43 Severance J ohnson, in The Enemy Within, has connectedCaillaux and Malvy to the 1918 abortive French Bolshevik revolution, andstates that if the revolution had succeeded, "Malvy would have been the Trotsky of France had Caillaux been its Lenin."44 Caillaux and Malvy formed aradical socialist party in France using German funds and were brought to trialfor these subversive efforts. The court interrogatories in the 1919 Frenchespionage trials introduce testimony concerning New York bankers and theirrelationship with these German espionage operators. They also set forth thelinks between Count Minotto and Caillaux, as well as the relationship of theGuaranty Trust Company to the Deutsche Bank and the cooperationbetween Hugo Schmidt of Deutsche Bank and Max May of Guaranty TrustCompany. The French interrogatory (page 940) has the following extract from

52



the New York deposition of Count Minotto (page 10, and retranslated fromthe French):

QUESTION: Under whose orders were you at Guaranty Trust?

REPLY: Under the orders of Mr. Max May.

QUESTION: He was a Vice President?

ANSWER: He was Vice President and Direc tor of the Foreign Department.

Later, in 1922, Max May became a director of the Soviet Ruskom-bank andrepresented the interests of Guaranty Trust in that bank. The Frenchinterrogatory establishes that Count Minotto, a German espionage agent,was in the employ of Guaranty Trust Company; that Max May was his superiorofficer; and that Max May was also closely associated with Bolshevik bankerOlof Aschberg. In brief: Max May of Guaranty Trust was linked to illegal fund

raising and German espionage in the United States during World War I; hewas linked indirectly to the Bolshevik Revolution and directly to theestablishment of Ruskombank, the first international bank in the Soviet Union.

It is too early to attempt an explanation for this seemingly inconsistent, illegal,and sometimes immoral international activity. In general, there are twoplausible explanations: the first, a relentless search for profits; the second —which agrees with the words of Otto Kahn of Kuhn, Loeb & Co. and of American International Corporation in the epigraph to this chapter — therealization of socialist aims, aims which "should, and can, be brought about"by nonsocialist means.

Footnotes:

1 J ohn Moody, The Truth about the Trusts(New York: Moody Publishing, 1904).

2 The J . P. Morgan Company was originally founded in London as GeorgePeabody and Co. in 1838. It was not incorporated until March 21, 1940. Thecompany ceased to exist in April 1954 when it merged with the Guaranty Trust Company, then its most important commercial bank subsidiary, and istoday known as the Morgan Guarantee Trust Company of New York.

3United States, House, Committee on Foreign Affairs, The Story of Panama,

Hearings on the Rainey Resolution, 1913. p. 53.

4Ibid., p. 60.

5Stanford, Calif. See also the Los Angeles Times, October 13, 1966.

53



6Later codirector with Hjalmar Schacht (Hitler's banker) and Emil Wittenberg,

of the Nationalbank für Deutschland.

7United States, Senate, Committee on Foreign Relations, Investigation of

Mexican Affairs, 1920.

8Lincoln Steffens, The Letters of Lincoln Steffens (New York: Harcourt, Brace,

1941, I:386

9U.S., Senate, Committee on Foreign Relations, Investigation of Mexican

Affairs, 1920, pts. 2, 18, p. 681.

10Ibid.

11New York Times, J anuary 23, 1919.

12U.S., Senate, Committee on Foreign Relations, op. cit., pp. 795-96.

13U.S., Senate, Hearings Before the Spec ial Committee Investigating the

Munitions Industry, 73-74th Cong., 1934-37, pt. 25, p. 7666.

14U.S. State Dept. Decimal File, 861.51/110 (316-116-682).

15U.S. State Dept. Dec imal File, 861.51/112.

16

U.S. State Dept. Dec imal File, 861.51/111.

17Handwritten in parentheses.

18Olof Aschberg, En Vandrande J ude Frän Glasbruksgatan (Stockholm: Albert

Bonniers Förlag, n.d.), pp. 98-99, which is included in Memoarer (Stockholm:Albert Bonniers Förlag, 1946). See also Gästboken (Stockholm: Tidens Förlag,1955) for further material on Aschberg.

19Aschberg, p. 123.

20New York Times, August 4, 1916.

21Michael Futrell, Northern Underground (London: Faber and Faber, 1963), p.

162.

22See Robert Paul Browder and Alexander F. Kerensky, The Russian Provisional

government, 1917 (Stanford, Calif.: Stanford University Perss, 1961), 3: 1365.

54





36French Strothers, Fighting Germany's Spies (Garden City, N.Y.: Doubleday,

Page, 1918), p. 152.

37U.S., Senate, Overman C ommittee, 2:2009.

38 This section is based on the following sources (as well as those citedelsewhere): Jean Bardanne, Le Colonel Nicolai: espion de genie (Paris:Editions Siboney, n.d.); Cours de J ustice, Affaire Caillaux, Loustalot et Comby:

Procedure Generale Interrogatoires (Paris, 1919), pp. 349-50, 937-46; PaulVergnet, L'Affaire Caillaux (Paris 1918), especially the chapter titled "Marx deMannheim"; Henri Guernut, Emile Kahn, and Camille M. Lemercier, Etudes

documentaires sur L'Affaire C aillaux (Paris, n.d.), pp. 1012-15; and GeorgeAdam, Treason and Tragedy: An Account of French War Trials (London: J onathan Cape, 1929).

39See p. 70.

40 This Interrelationship is dealt with extensively in the three-volume Overman

Committee report of 1919. See bibliography.

41See Rudolph Binion, Defeated Leaders (New York: Columbia University Press,

1960).

42George Adam, Treason and Tragedy: An Account of French War Trials

(London: J onathan Cape, 1929).

43Ibid.

44 The Enemy Within (London: George Allen & Unwin, 1920).

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Chapter V

THE AMERICAN RED CROSS MISSION IN

RUSSIA — 1917

Poor Mr. Billings believed he was in charge of a scientific mission for the relief of Russia .... He was in reality nothing but a mask — the Red Cross complexionof the mission was nothing but a mask.

Cornelius Kelleher, assistant to William Boyce Thompson (in George F. Kennan,

Russia Leaves the War)

The Wall Street project in Russia in 1917 used the Red Cross Mission as its

operational vehicle. Both Guaranty Trust and National City Bank hadrepresentatives in Russia at the time of the revolution. Frederick M. Corse of the National City Bank branch in Petrograd was attached to the AmericanRed Cross Mission, of which a great deal will be said later. Guaranty Trust wasrepresented by Henry Crosby Emery. Emery was temporarily held by theGermans in 1918 and then moved on to represent Guaranty Trust 'in China.

Up to about 1915 the most influential person in the American Red CrossNational Headquarters in Washington, D.C. was Miss Mabel Boardman. Anactive and energetic promoter, Miss Boardman had been the moving force

behind the Red Cross enterprise, although its endowment came fromwealthy and prominent persons including J . P. Morgan, Mrs. E. H. Harriman,Cleveland H. Dodge, and Mrs. Russell Sage. The 1910 fund-raising campaignfor $2 million, for example, was successful only because it was supported bythese wealthy residents of New York City. In fact, most of the money camefrom New York City. J .P. Morgan himself contributed $100,000 and sevenother contributors in New York City amassed $300,000. Only one personoutside New York City contributed over $10,000 and that was William J .Boardman, Miss Boardman's father. Henry P. Davison was chairman of the1910 New York Fund-Raising Committee and later became chairman of theWar Council of the American Red Cross. In other words, in World War I the

Red Cross depended heavily on Wall Street, and specifically on the Morganfirm.

The Red Cross was unable to cope with the demands of World War I and ineffect was taken over by these New York bankers. According to J ohn FosterDulles, these businessmen "viewed the American Red Cross as a virtual arm of government, they envisaged making an incalculable contribution to thewinning of the war."1 In so doing they made a mockery of the Red Cross

57



motto: "Neutrality and Humanity."

In exchange for raising funds, Wall Street asked for the Red Cross WarCouncil; and on the recommendation of Cleveland H. Dodge, one of Woodrow Wilson's financial backers, Henry P. Davison, a partner in J .P.

Morgan Company, became chairman. The list of administrators of the RedCross then began to take on the appearance of the New York Directory of Directors: J ohn D. Ryan, president of Anaconda Copper Company (seefrontispiece); George W. Hill, president of the American Tobacco Company;Grayson M.P. Murphy, vice president of the Guaranty Trust Company; and IvyLee, public relations expert for the Rockefellers. Harry Hopkins, later toachieve fame under President Roosevelt, became assistant to the generalmanager of the Red Cross in Washington, D.C.

The question of a Red Cross Mission to Russia came before the third meetingof this reconstructed War Counc il, which was held in the Red Cross Building,

Washington, D.C., on Friday, May 29, 1917, at 11:00 A.M. Chairman Davisonwas deputed to explore the idea with Alexander Legge of the InternationalHarvester Company. Subsequently International Harvester, which hadconsiderable interests in Russia, provided $200,000 to assist financing theRussian mission. At a later meeting it was made known that William Boyce Thompson, director of the Federal Reserve Bank of New York, had "offered topay the entire expense of the commission"; this offer was accepted in atelegram: "Your desire to pay expenses of commission to Russia is very muchappreciated and from our point of view very important."2

The members of the mission received no pay. All expenses were paid byWilliam Boyce Thompson and the $200,000 from International Harvester wasapparently used in Russia for political subsidies. We know from the files of theU.S. embassy in Petrograd that the U.S. Red Cross gave 4,000 rubles to PrinceLvoff, president of the Council of Ministers, for "relief of revolutionists" and10,000 rubles in two payments to Kerensky for "relief of political refugees."

AMERICAN RED CROSS MISSION TO RUSSIA, 1917

In August 1917 the American Red Cross Mission to Russia had only a nominal

relationship with the American Red Cross, and must truly have been the mostunusual Red Cross Mission in history. All expenses, including those of theuniforms — the members were all colonels, majors, captains, or lieutenants —were paid out of the pocket of William Boyce Thompson. One contemporaryobserver dubbed the all-officer group an "Haytian Army":

The American Red Cross delegation, about forty Colonels, Majors, Captainsand Lieutenants, arrived yesterday. It is headed by Colonel (Doctor) Billings of

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Chicago, and includes Colonel William B. Thompson and many doctors andcivilians, all with military titles; we dubbed the outfit the "Haytian Army"because there were no privates. They have come to fill no clearly definedmission, as far as I can find out, in fact Gov. Francis told me some time agothat he had urged they not be allowed to come, as there were already too

many missions from the various allies in Russia. Apparently, this Commissionimagined there was urgent call for doctors and nurses in Russia; as a matterof fact there is at present a surplus of medical talent and nurses, native andforeign in the country and many haft-empty hospitals in the large cities.3

The mission ac tually comprised only twenty-four (not forty), having militaryrank from lieutenant colonel down to lieutenant, and was supplemented bythree orderlies, two motion-picture photographers, and two interpreters,without rank. Only five (out of twenty-four) were doctors; in addition, therewere two medical researchers. The mission arrived by train in Petrograd viaSiberia in August 1917. The five doctors and orderlies stayed one month,

returning to the United States on September 11. Dr. Frank Billings, nominalhead of the mission and professor of medicine at the University of Chicago,was reported to be disgusted with the overtly political activities of themajority of the mission. The other medical men were William S. Thayer,professor of medicine at J ohns Hopkins University; D. J . McCarthy, Fellow of Phipps Institute for Study and Prevention of Tuberculosis, at Philadelphia;Henry C. Sherman, professor of food chemistry at Columbia University; C. E. A.Winslow, professor of bacteriology and hygiene at Yale Medical School;Wilbur E. Post, professor of medicine at Rush Medical College; Dr. MalcolmGrow, of the Medical Officers Reserve Corps of the U.S. Army; and Orrin

Wightman, professor of clinical medicine, New York Polyclinic Hospital.George C. Whipple was listed as professor of sanitary engineering at HarvardUniversity but in fact was partner of the New York firm of Hazen, Whipple &Fuller, engineering consultants. This is significant because Malcolm Pirnie — of whom more later — was listed as an assistant sanitary engineer andemployed as an engineer by Hazen, Whipple & Fuller.

The majority of the mission, as seen from the table, was made up of lawyers,financiers, and their assistants, from the New York financial district. The missionwas financed by William B. Thompson, described in the official Red Crosscircular as "Commissioner and Business Manager; Direc tor United States

Federal Bank of New York." Thompson brought along Cornelius Kelleher,described as an attache to the mission but actually secretary to Thompsonand with the same address — 14 Wall Street, New York City. Publicity for themission was handled by Henry S. Brown, of the same address. Thomas Day Thacher was an attorney with Simpson, Thacher & Bartlett, a firm founded byhis father, Thomas Thacher, in 1884 and prominently involved in railroadreorganization and mergers. Thomas as junior first worked for the family firm,

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Alan Wardwell, also a deputy commissioner and secretary to the chairman,was a lawyer with the law firm of Stetson, J ennings & Russell of 15 BroadStreet, New York City, and H. B. Redfield was law sec retary to Wardwell. MajorWardwell was the son of William Thomas Wardwell, long-time treasurer of Standard Oil of New J ersey and Standard Oil of New York. The elder Wardwell

was one of the signers of the famous Standard Oil trust agreement, amember of the committee to organize Red Cross activities in the SpanishAmerican War, and a director of the Greenwich Savings Bank. His son Alanwas a director not only of Greenwich Savings, but also of Bank of New Yorkand Trust Co. and the Georgian Manganese Company (along with W. AverellHarriman, a director of Guaranty Trust). In 1917 Alan Wardwell was affiliatedwith Stetson, J ennings 8c Russell and later joined Davis, Polk, Wardwell,Gardner & Read (Frank L. Polk was acting secretary of state during theBolshevik Revolution period). The Senate Overman Committee noted thatWardwell was favorable to the Soviet regime although Poole, the State

Department official on the spot, noted that "Major Wardwell has of allAmericans the widest personal knowledge of the terror" (316-23-1449). In the1920s Wardwell became active with the Russian-American Chamber of Commerce in promoting Soviet trade objectives.

The treasurer of the mission was J ames W. Andrews, auditor of Liggett & Myers Tobacco C ompany of St. Louis. Robert I. Barr, another member, was listed asa deputy commissioner; he was a vice president of Chase SecuritiesCompany (120 Broadway) and of the Chase National Bank. Listed as being incharge of advertising was William Cochran of 61 Broadway, New York City.Raymond Robins, a mining promoter, was included as a deputy

commissioner and described as "a social economist." Finally, the missionincluded two members of Swift & Company of Union Stockyards, Chicago. The Swifts have been previously mentioned as being connected withGerman espionage in the United States during World War I. Harold H. Swift,deputy commissioner, was assistant to the vice president of Swift & Company;William G. Nicholson was also with Swift & Company, Union Stockyards.

Two persons were unofficially added to the mission after it arrived inPetrograd: Frederick M. Corse, representative of the National City Bank inPetrograd; and Herbert A. Magnuson, who was "very highly recommendedby J ohn W. Finch, the confidential agent in China of Colonel William B. Thompson."4

The Pirnie papers, deposited at the Hoover Institution, contain primarymaterial on the mission. Malcolm Pirnie was an engineer employed by thefirm of Hazen, Whipple & Fuller, consulting engineers, of 42 Street, New YorkCity. Pirnie was a member of the mission, listed on a manifest as an assistantsanitary engineer. George C. Whipple, a partner in the firm, was also

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included in the group. The Pirnie papers include an original telegram fromWilliam B. Thompson, inviting assistant sanitary engineer Pirnie to meet withhim and Henry P. Davison, chairman of the Red Cross War Council andpartner in the J .P. Morgan firm, before leaving for Russia. The telegram readsas follows:

WESTERN UNION TELEGRAM New York, J une 21, 1917

To Malcolm Pirnie

I should very much like to have you dine with me at the Metropolitan Club,Sixteenth Street and Fifth Avenue New York City at eight o'clock tomorrowFriday evening to meet Mr. H. P. Davison.

W. B. Thompson, 14 Wall Street

The files do not elucidate why Morgan partner Davison and Thompson,director of the Federal Reserve Bank — two of the most prominent financialmen in New York — wished to have dinner with an assistant sanitary engineerabout to leave for Russia. Neither do the files explain why Davison wassubsequently unable to meet Dr. Billings and the commission itself, nor why itwas necessary to advise Pirnie of his inability to do so. But we may surmisethat the official cover of the mission — Red Cross activities — was of significantly less interest than the Thompson-Pirnie activities, whatever theymay have been. We do know that Davison wrote to Dr. Billings on J une 25,1917:

Dear Doctor Billings:

It is a disappointment to me and to my associates on the War Council nothave been able to meet in a body the members of your Commission ....

A copy of this letter was also mailed to assistant sanitary engineer Pirnie witha personal letter from Morgan banker Henry P. Davison, which read:

My dear Mr. Pirnie:

You will, I am sure, entirely understand the reason for the letter to Dr. Billings,copy of which is enc losed, and accept it in the spirit in which it is sent ....

The purpose of Davison's letter to Dr. Billings was to apologize to thecommission and Billings for being unable to meet with them. We may then be justified in supposing that some deeper arrangements were made by Davisonand Pirnie concerning the activities of the mission in Russia and that thesearrangements were known to Thompson. The probable nature of theseactivities will be described later.5

The American Red Cross Mission (or perhaps we should call it the Wall StreetMission to Russia) also employed three Russian-English interpreters: Captain

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Ilovaisky, a Russian Bolshevik; Boris Reinstein, a Russian-American, latersecretary to Lenin, and the head of Karl Radek's Bureau of InternationalRevolutionary Propaganda, which also employed J ohn Reed and Albert RhysWilliams; and Alexander Gumberg (alias Berg, real name MichaelGruzenberg), who was a brother of Zorin, a Bolshevik minister. Gumberg was

also the chief Bolshevik agent in Scandinavia. He later became aconfidential assistant to Floyd Odlum of Atlas Corporation in the United Statesas well as an adviser to Reeve Schley, a vice president of the Chase Bank.

It should be asked in passing: How useful were the translations supplied bythese interpreters? On September 13, 1918, H. A. Doolittle, American viceconsul at Stockholm, reported to the secretary of state on a conversationwith Captain Ilovaisky (who was a "close personal friend" of Colonel Robins of the Red Cross Mission) concerning a meeting of the Murman Soviet and theAllies. The question of inviting the Allies to land at Murman was underdiscussion at the Soviet, with Major Thacher of the Red Cross Mission actingfor the Allies. Ilovaisky interpreted Thacher's views for the Soviet. "Ilovaiskyspoke at some length in Russian, supposedly translating for Thacher, but inreality for Trotsky .... "to the effec t that "the United States would never permitsuch a landing to occur and urging the speedy recognition of the Sovietsand their politics."6 Apparently Thacher suspected he was beingmistranslated and expressed his indignation. However, "Ilovaisky immediatelytelegraphed the substance to Bolshevik headquarters and through their pressbureau had it appear in all the papers as emanating from the remarks of Major Thacher and as the general opinion of all truly accredited Americanrepresentatives."7

Ilovaisky recounted to Maddin Summers, U.S. consul general in Moscow,several instances where he (Ilovaisky) and Raymond Robins of the Red CrossMission had manipulated the Bolshevik press, especially "in regard to therecall of the Ambassador, Mr. Francis." He admitted that they had not beenscrupulous, "but had acted according to their ideas of right, regardless of how they might have conflicted with the politics of the accredited Americanrepresentatives."8

This then was the American Red Cross Mission to Russia in 1917.

AMERICAN RED CROSS MISSION TO RUMANIA

In 1917 the American Red Cross also sent a medical assistance mission toRumania, then fighting the Central Powers as an ally of Russia. A comparisonof the American Red Cross Mission to Russia with that sent to Rumaniasuggests that the Red Cross Mission based in Petrograd had very little official

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connection with the Red Cross and even less connection with medicalassistance. Whereas the Red Cross Mission to Rumania valiantly upheld theRed Cross twin principles of "humanity" and "neutrality," the Red Cross Missionin Petrograd flagrantly abused both.

The American Red C ross Mission to Rumania left the United States in July 1917and located itself at J assy. The mission consisted of thirty persons underChairman Henry W. Anderson, a lawyer from Virginia. Of the thirty, sixteenwere either doctors or surgeons. By comparison, out of twenty-nine individualswith the Red Cross Mission to Russia, only three were doctors, althoughanother four members were from universities and specialized in medicallyrelated fields. At the most, seven could be classified as doctors with themission to Russia compared with sixteen with the mission to Rumania. Therewas about the same number of orderlies and nurses with both missions. Thesignificant comparison, however, is that the Rumanian mission had only twolawyers, one treasurer, and one engineer. The Russian mission had fifteenlawyers and businessmen. None of the Rumanian mission lawyers or doctorscame from anywhere near the New York area but all, except one (an"observer" from the Department of J ustice in Washington, D.C.), of thelawyers and businessmen with the Russian mission came from that area.Which is to say that more than half the total of the Russian mission came fromthe New York financial district. In other words, the relative composition of these missions confirms that the mission to Rumania had a legitimate purpose— to practice medicine — while the Russian mission had a non-medical andstrictly political objective. From its personnel, it could be classified as acommercial or financial mission, but from its actions it was a subversive

political action group.

PERSONNEL WITH THE AMERICAN RED CROSS MISSIONS TO RUSSIA ANDRUMANIA, 1917

AMERICAN RED CROSS MISSION TO

Personnel Russia Rumania

Medical (doctors and surgeons) 7 16

Orderlies, nurses 7 10

Lawyers and businessmen 15 4TOTAL 29 30

SOURCES:

American Red Cross, Washington, D.C.

U.S. Department of State, Petrograd embassy, Red C ross file, 1917.

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November 13 Anderson cabled Ambassador Francis concerning Thompson'slack of interest in Rumanian conditions:

Requested Thompson furnish details all shipments as received but have notobtained same .... Also requested him keep me posted as to transportconditions but received very little information.

Anderson then requested that Ambassador Francis intercede on his behalf inorder to have funds for the Rumanian Red Cross handled in a separateaccount in London, directly under Anderson and removed from the controlof Thompson's mission.

THOMPSON IN KERENSKY'S RUSSIA

What then was the Red Cross Mission doing? Thompson certainly acquired areputation for opulent living in Petrograd, but apparently he undertook onlytwo major projects in Kerensky's Russia: support for an American propagandaprogram and support for the Russian Liberty Loan. Soon after arriving in Russia Thompson met with Madame Breshko-Breshkovskaya and David Soskice,Kerensky's secretary, and agreed to contribute $2 million to a committee of popular education so that it could "have its own press and... engage a staff of lecturers, with cinematograph illustrations" (861.00/ 1032); this was for thepropaganda purpose of urging Russia to continue in the war againstGermany. According to Soskice, "a packet of 50,000 rubles" was given toBreshko-Breshkovskaya with the statement, "This is for you to expendaccording to your best judgment." A further 2,100,000 rubles was deposited

into a current bank account. A letter from J . P. Morgan to the StateDepartment (861.51/190) confirms that Morgan cabled 425,000 rubles to Thompson at his request for the Russian Liberty Loan; J . P. also conveyed theinterest of the Morgan firm regarding "the wisdom of making an individualsubscription through Mr. Thompson" to the Russian Liberty Loan. These sumswere transmitted through the National City Bank branch in Petrograd.

THOMPSON GIVES THE BOLSHEVIKS $1 MILLION

Of greater historical significance, however, was the assistance given to theBolsheviks first by Thompson, then, after December 4, 1917, by RaymondRobins.

Thompson's contribution to the Bolshevik cause was recorded in thecontemporary American press. The Washington Post of February 2, 1918,carried the following paragraphs:

GIVES BOLSHEVIKI A MILLION

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W. B. Thompson, Red Cross Donor, Believes Party Misrepresented. New York,Feb. 2 (1918). William B. Thompson, who was in Petrograd from J uly untilNovember last, has made a personal contribution of $1,000,000 to theBolsheviki for the purpose of spreading their doctrine in Germany and Austria.

Mr. Thompson had an opportunity to study Russian conditions as head of theAmerican Red Cross Mission, expenses of which also were largely defrayedby his personal contributions. He believes that the Bolsheviki constitute thegreatest power against Pro-Germanism in Russia and that their propagandahas been undermining the militarist regimes of the General Empires.

Mr. Thompson deprecates American criticism of the Bolsheviki. He believesthey have been misrepresented and has made the financial contribution tothe cause in the belief that it will be money well spent for the future of Russiaas well as for the Allied cause.

Hermann Hagedorn's biography The Magnate: William Boyce Thompson and

His Time (1869-1930) reproduces a photograph of a cablegram from J .P.Morgan in New York to W. B. Thompson, "Care American Red Cross, HotelEurope, Petrograd." The cable is date-stamped, showing it was received atPetrograd "8-Dek 1917" (8 December 1917), and reads:

New York Y757/5 24W5 Nil — Your cable second received. We have paidNational City Bank one million dollars as instructed — Morgan.

The National City Bank branch in Petrograd had been exempted from theBolshevik nationalization decree — the only foreign or domestic Russian bankto have been so exempted. Hagedorn says that this million dollars paid into

Thompson's NCB account was used for "political purposes."

SOCIALIST MINING PROMOTER RAYMOND ROBINS9

William B. Thompson left Russia in early December 1917 to return home. Hetraveled via London, where, in company with Thomas Lamont of the J .P.Morgan firm, he visited Prime Minister Lloyd George, an episode we pick up inthe next chapter. His deputy, Raymond Robins, was left in charge of the RedCross Mission to Russia. The general impression that Colonel Robins presentedin the subsequent months was not overlooked by the press. In the words of the Russian newspaper Russkoe Slovo, Robins "on the one hand representsAmerican labor and on the other hand American capital, which isendeavoring through the Soviets to gain their Russian markets."10

Raymond Robins started life as the manager of a Florida phosphatecompany commissary. From this base he developed a kaolin deposit, thenprospected Texas and the Indian territories in the late nineteenth century.

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Moving north to Alaska, Robins made a fortune in the Klondike gold rush. Then, for no observable reason, he switched to soc ialism and the reformmovement. By 1912 he was an active member of Roosevelt's ProgressiveParty. He joined the 1917 American Red Cross Mission to Russia as a "socialeconomist."

There is considerable evidence, including Robins' own statements, that hisreformist social-good appeals were little more than covers for the acquisitionof further power and wealth, reminiscent of Frederick Howe's suggestions inConfessions of a Monopolist. For example, in February 1918 Arthur Bullard wasin Petrograd with the U.S. Committee on Public Information and engaged inwriting a long memorandum for Colonel Edward House. This memorandumwas given to Robins by Bullard for comments and criticism before transmissionto House in Washington, D.C. Robins' very unsocialistic and imperialisticcomments were to the effect that the manuscript was "uncommonlydiscriminating, far-seeing and well done," but that he had one or tworeservations — in particular, that recognition of the Bolsheviks was longoverdue, that it should have been effected immediately, and that had theU.S. so recognized the Bolsheviks, "I believe that we would now be in controlof the surplus resources of Russia and have control officers at all points on thefrontier."11

This desire to gain "control of the surplus resources of Russia" was also obviousto Russians. Does this sound like a social reformer in the American Red Crossor a Wall Street mining promoter engaged in the practical exercise of imperialism?

In any event, Robins made no bones about his support for the Bolshevists.12 Barely three weeks after the Bolshevik phase of the Revolution started, Robinscabled Henry Davison at Red Cross headquarters: "Please urge upon thePresident the necessity of our continued intercourse with the BolshevikGovernment." Interestingly, this cable was in reply to a cable instructingRobins that the "President desires the withholding of direct communicationsby representatives of the United States with the Bolshevik Government."13 Several State Department reports complained about the partisan nature of Robins' ac tivities. For example, on March 27, 1919, Harris, the American consulat Vladivostok, commented on a long conversation he had had with Robins

and protested gross inaccuracies in the latter's reporting. Harris wrote, "Robinsstated to me that no German and Austrian prisoners of war had joined theBolshevik army up to May 1918. Robbins knew this statement was absolutelyfalse." Harris then proceeded to provide the details of evidence available toRobins.14

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Limit of Area Controlled by Bolsheviks, J anuary 1918

Harris concluded, "Robbins deliberately misstated facts concerning Russia atthat time and he has been doing it ever since."

On returning to the United States in 1918, Robins continued his efforts in behalf of the Bolsheviks. When the files of the Soviet Bureau were seized by the LuskCommittee, it was found that Robins had had "considerablecorrespondence" with Ludwig Martens and other members of the bureau.One of the more interesting documents seized was a letter from SanteriNuorteva (alias Alexander Nyberg), the first Soviet representative in the U.S.,to "Comrade Cahan," editor of the New York Daily Forward. The letter calledon the party faithful to prepare the way for Raymond Robins:

(To Daily) FORWARD J uly 6, 1918

Dear Comrade Cahan:

It is of the utmost importance that the Socialist press set up a clamorimmediately that Col. Raymond Robins, who has just returned from Russia atthe head of the Red Cross Mission, should be heard from in a public report tothe American people. The armed intervention danger has greatly increased. The reactionists are using the Czecho-Slovak adventure to bring aboutinvasion. Robins has all the facts about this and about the situation in Russiagenerally. He takes our point of view.

I am enclosing copy of Call editorial which shows a general line of argument,

also some facts about Czecho-Slovaks.

Fraternally,

PS&AU Santeri Nuorteva

THE INTERNATIONAL RED CROSS AND REVOLUTION

Unknown to its administrators, the Red Cross has been used from time to timeas a vehicle or cover for revolutionary activities. The use of Red Crossmarkings for unauthorized purposes is not uncommon. When Tsar Nicholaswas moved from Petrograd to Tobolsk allegedly for his safety (although thisdirection was towards danger rather than safety), the train carried J apaneseRed Cross placards. The State Department files contain examples of revolutionary activity under cover of Red C ross activities. For example, aRussian Red Cross official (Chelgajnov) was arrested in Holland in 1919 forrevolutionary acts (316-21-107). During the Hungarian Bolshevik revolution in1918, led by Bela Kun, Russian members of the Red Cross (or revolutionaries

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http://reformed-theology.org/html/books/bolshevik_revolution/zarea_controlled_by_bolsheviks.htm

http://reformed-theology.org/html/books/bolshevik_revolution/zarea_controlled_by_bolsheviks.htm



operating as members of the Russian Red Cross) were found in Vienna andBudapest. In 1919 the U.S. ambassador in London cabled Washingtonstartling news; through the British government he had learned that "severalAmericans who had arrived in this country in the uniform of the Red Crossand who stated that they were Bolsheviks . . . were proceeding through

France to Switzerland to spread Bolshevik propaganda." The ambassadornoted that about 400 American Red Cross people had arrived in London inNovember and December 1918; of that number one quarter returned to theUnited States and "the remainder insisted on proceeding to France." Therewas a later report on J anuary 15, 1918, to the effect that an editor of a labornewspaper in London had been approached on three different occasions bythree different American Red Cross officials who offered to take commissionsto Bolsheviks in Germany. The editor had suggested to the U.S. embassy thatit watch American Red Cross personnel. The U.S. State Department tookthese reports seriously and Polk cabled for names, stating, "If true, I consider it

of the greatest importance" (861.00/3602 and /3627).

To summarize: the picture we form of the 1917 American Red C ross Mission toRussia is remote from one of neutral humanitarianism. The mission was in facta mission of Wall Street financiers to influence and pave the way for control,through either Kerensky or the Bolshevik revolutionaries, of the Russian marketand resources. No other explanation will explain the actions of the mission.However, neither Thompson nor Robins was a Bolshevik. Nor was either evena consistent socialist. The writer is inclined to the interpretation that thesoc ialist appeals of each man were covers for more prosaic objectives. Eachman was intent upon the commercial; that is, each sought to use the political

process in Russia for personal financial ends. Whether the Russian peoplewanted the Bolsheviks was of no concern. Whether the Bolshevik regimewould act against the United States — as it consistently did later — was of noconcern. The single overwhelming objective was to gain political andeconomic influence with the new regime, whatever its ideology. If WilliamBoyce Thompson had acted alone, then his directorship of the FederalReserve Bank would be inconsequential. However, the fact that his missionwas dominated by representatives of Wall Street institutions raises a seriousquestion — in effect, whether the mission was a planned, premeditatedoperation by a Wall Street syndicate. This the reader will have to judge for

himself, as the rest of the story unfolds.Footnotes:

1 J ohn Foster Dulles, American Red Cross (New York: Harper, 1950).

2Minutes of the War Council of the American National Red Cross

(Washington, D.C., May 1917)

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3Gibbs Diary, August 9, 1917. State Historical Society of Wisconsin.

4Billings report to Henry P. Davison, October 22, 1917, American Red Cross

Archives.

5 The Pirnie papers also enable us to fix exac tly the dates that members of themission left Russia. In the case of William B. Thompson, this date is critical tothe argument of this book: Thompson left Petrograd for London on December4, 1917. George F. Kennan states Thompson left Petrograd on November 27,1917 (Russia Leaves the War, p. 1140).


7Ibid.

8Ibid.

9Robins is the correct spelling. The name is consistently spelled "Robbins" in the

Stale Department files.

10U.S. State Dept. Decimal File, 316-11-1265, March 19, 1918.

11Bullard ms., U.S. State Dept. Decimal File, 316-11-1265.

12 The New World Review (fall 1967, p. 40) comments on Robins, noting that he

was "in sympathy with the aims of the Revolution, although a capitalist "13

Petrograd embassy, Red Cross file.


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course, a major material in the manufacture of munitions. Thompson was alsodirector of the Chicago Rock Island & Pacific Railroad, the Magma ArizonaRailroad and the Metropolitan Life Insurance Company. And of particularinterest for this book, Thompson was "one of the heaviest stockholders in theChase National Bank." It was Albert H. Wiggin, president of the Chase Bank,

who pushed Thompson for a post in the Federal Reserve System; and in 1914 Thompson became the first full-term director of the Federal Reserve Bank of New York — the most important bank in the Federal Reserve System.

By 1917, then, William Boyce Thompson was a financial operator of substantial means, demonstrated ability, with a flair for promotion andimplementation of capitalist projects, and with ready access to the centers of political and financial power. This was the same man who first supportedAleksandr Kerensky, and who then became an ardent supporter of theBolsheviks, bequeathing a surviving symbol of this support — a laudatorypamphlet in Russian, "Pravda o Rossii i Bol'shevikakh."2

Before leaving Russia in early December 1917 Thompson handed over theAmerican Red Cross Mission to his deputy Raymond Robins. Robins thenorganized Russian revolutionaries to implement the Thompson plan forspreading Bolshevik propaganda in Europe (see Appendix 3). A Frenchgovernment document confirms this: "It appeared that Colonel Robins . . .was able to send a subversive mission of Russian bolsheviks to Germany tostart a revolution there."3 This mission led to the abortive German Spartacistrevolt of 1918. The overall plan also included schemes for dropping Bolshevikliterature by airplane or for smuggling it across German lines.

Thompson made preparations in late 1917 to leave Petrograd and sell theBolshevik Revolution to governments in Europe and to the U.S. With this inmind, Thompson cabled Thomas W. Lamont, a partner in the Morgan firmwho was then in Paris with Colonel E. M. House. Lamont recorded the receiptof this cablegram in his biography:

J ust as the House Mission was completing its discussions in Paris in December1917, I received an arresting cable from my old school and business friend,William Boyce Thompson, who was then in Petrograd in charge of theAmerican Red C ross Mission there.4

Lamont journeyed to London and met with Thompson, who had leftPetrograd on December 5, traveled via Bergen, Norway, and arrived inLondon on December 10. The most important achievement of Thompson andLamont in London was to convince the British War Cabinet — then decidedlyanti-Bolshevik — that the Bolshevik regime had come to stay, and that Britishpolicy should cease to be anti-Bolshevik, should accept the new realities, andshould support Lenin and Trotsky. Thompson and Lamont left London onDecember 18 and arrived in New York on December 25, 1917. They

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remarks was to the effect that the Revolution had come to stay; that theAllies had not shown themselves sufficiently sympathetic with the Revolution;and that MM. Trotzki and Lenin were not in German pay, the latter being afairly distinguished Professor. Mr. Thompson had added that he consideredthe Allies should conduct in Russia an active propaganda, carried out by

some form of Allied Council composed o[ men especially selected [or thepurpose; further, that on the whole, he considered, having regard to thecharacter of the de facto Russian Government, the several AlliedGovernments were not suitably represented in Petrograd. In Mr. Thompson'sopinion, it was necessary for the Allies to realise that the Russian army andpeople were out of the war, and that the Allies would have to choosebetween Russia as the friendly or a hostile neutral.

The question was discussed as to whether the Allies ought not to change theirpolicy in regard to the de facto Russian Government, the Bolsheviks beingstated by Mr. Thompson to be and-German. In this connection Lord RobertCecil drew attention to the conditions of the armistice between the Germanand Russian armies, which provided, inter alia, for trading between the twocountries, and for the establishment of a Purchasing Commission in Odessa,the whole arrangement being obviously dictated by the Germans. LordRobert Cecil expressed the view that the Germans would endeavour tocontinue the armistice until the Russian army had melted away.

Sir Edward Carson read a communication, signed by M. Trotzki, which hadbeen sent to him by a British subject, the manager of the Russian branch of the Vauxhall Motor Company, who had just returned from Russia [Paper G.T.

— 3040]. This report indicated that M. Trotzki's policy was, ostensibly at anyrate, one of hostility to the organisation of c ivilised society rather than pro-German. On the other hand, it was suggested that an assumed attitude of this kind was by no means inconsistent with Trotzki's being a German agent,whose object was to ruin Russia in order that Germany might do what shedesired in that country.

After hearing Lloyd George's report and supporting arguments, the WarCabinet decided to go along with Thompson and the Bolsheviks. Milner hada former British consul in Russia — Bruce Lockhart — ready and waiting in thewings. Lockhart was briefed and sent to Russia with instructions to work

informally with the Soviets. The thoroughness of Thompson's work in London and the pressure he wasable to bring to bear on the situation are suggested by subsequent reportscoming into the hands of the War Cabinet, from authentic sources. Thereports provide a quite different view of Trotsky and the Bolsheviks from thatpresented by Thompson, and yet they were ignored by the cabinet. In April1918 General J an Smuts reported to the War Cabinet his talk with General

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Nieffel, the head of the French Military Mission who had just returned fromRussia:

Trotski (sic) . . . was a consummate scoundrel who may not be pro-German,but is thoroughly pro-Trotski and pro-revolutionary and cannot in any way betrusted. His influence is shown by the way he has come to dominate Lockhart,Robins and the French representative. He [Nieffel] counsels great prudencein dealing with Trotski, who he admits is the only rea lly able man in Russia.9

Several months later Thomas D. Thacher, Wall Street lawyer and anothermember of the American Red CrAss Mission to Russia, was in London. On April13, 1918, Thacher wrote to the American ambassador in London to the effectthat he had received a request from H. P. Davison, a Morgan partner, "to

confer with Lord Northcliffe" concerning the situation in Russia and then to goon to Paris "for other conferences." Lord Northcliffe was ill and Thacher leftwith yet another Morgan partner, Dwight W. Morrow, a memorandum to besubmitted to Northcliffe on his return to London.10 This memorandum not onlymade explicit suggestions about Russian policy that supported Thompson'sposition but even stated that "the fullest assistance should be given to theSoviet government in its efforts to organize a volunteer revolutionary army." The four main proposals in this Thacher report are:

First of all . . . the Allies should discourage J apanese intervention in Siberia.

In the second place, the fullest assistance should be given to the SovietGovernment in its efforts to organize a volunteer revolutionary army.

Thirdly, the Allied Governments should give their moral support to the Russian

people in their efforts to work out their own political systems free from thedomination of any foreign power ....

Fourthly, until the time when open conflict shall result between the GermanGovernment and the Soviet Government of Russia there will be opportunityfor peaceful commercial penetration by German agencies in Russia. So longas there is no open break, it will probably be impossible to entirely preventsuch commerce. Steps should, therefore, be taken to impede, so far aspossible, the transport of grain and raw materials to Germany from Russia.11

THOMPSON'S INTENTIONS AND OBJECTIVES

Why would a prominent Wall Street financier, and director of the FederalReserve Bank, want to organize and assist Bolshevik revolutionaries? Whywould not one but several Morgan partners working in concert want toencourage the formation of a Soviet "volunteer revolutionary army" — anarmy supposedly dedicated to the overthrow of Wall Street, including Thompson, Thomas Lamont, Dwight Morrow, the Morgan firm, and all their

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associates?

Thompson at least was straightforward about his objectives in Russia: hewanted to keep Russia at war with Germany (yet he argued before the BritishWar Cabinet that Russia was out of the war anyway) and to retain Russia as a

market for postwar American enterprise. The December 1917 Thompsonmemorandum to Lloyd George describes these aims.12 The memorandumbegins, "The Russian situation is lost and Russia lies entirely open to unopposedGerman exploitation .... "and concludes, "I believe that intelligent andcourageous work will still prevent Germany from occupying the field to itself and thus exploiting Russia at the expense of the Allies." Consequently, it wasGerman commercial and industrial exploitation of Russia that Thompsonfeared (this is also reflected in the Thacher memorandum) and that brought Thompson and his New York friends into an alliance with the Bolsheviks.Moreover, this interpretation is reflected in a quasi-jocular statement madeby Raymond Robins, Thompson's deputy, to Bruce Lockhart, the British agent:

You will hear it said that I am the representative of Wall Street; that I am theservant of William B. Thompson to get Altai copper for him; that I havealready got 500,000 acres of the best timber land in Russia for myself; that Ihave already copped off the Trans-Siberian Railway; that they have givenme a monopoly of the platinum of Russia; that this explains my working for thesoviet .... You will hear that talk. Now, I do not think it is true, Commissioner,but let us assume it is true. Let us assume that I am here to capture Russia forWall Street and American business men. Let us assume that you are a Britishwolf and I am an American wolf, and that when this war is over we are goingto eat each other up for the Russian market; let us do so in perfectly frank,man fashion, but let us assume at the same time that we are fairly intelligentwolves, and that we know that if we do not hunt together in this hour theGerman wolf will eat us both up, and then let us go to work.13

With this in mind let us take a look at Thompson's personal motivations. Thompson was a financier, a promoter, and, although without previousinterest in Russia, had personally financed the Red Cross Mission to Russia andused the mission as a vehicle for political maneuvering. From the total picturewe can deduce that Thompson's motives were primarily financial andcommercial. Specifically, Thompson was interested in the Russian market,and how this market could be influenced, diverted; and captured forpostwar exploitation by a Wall Street syndicate, or syndicates. Certainly Thompson viewed Germany as an enemy, but less a political enemy than aneconomic or a commercial enemy. German industry and German bankingwere the real enemy. To outwit Germany, Thompson was willing to placeseed money on any political power vehicle that would achieve his objective.In other words, Thompson was an American imperialist fighting againstGerman imperialism, and this struggle was shrewdly recognized and

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exploited by Lenin and Trotsky.

The evidence supports this apolitical approach. In early August 1917, WilliamBoyce Thompson lunched at the U.S. Petrograd embassy with Kerensky, Terestchenko, and the American ambassador Francis. Over lunch Thompson

showed his Russian guests a cable he had just sent to the New York office of J .P. Morgan requesting transfer of 425,000 rubles to cover a personalsubscription to the new Russian Liberty Loan. Thompson also asked Morgan to"inform my friends I recommend these bonds as the best war investment Iknow. Will be glad to look after their purchasing here without compensation";he then offered personally to take up twenty percent of a New Yorksyndicate buying five million rubles of the Russian loan. Not unexpectedly,Kerensky and Terestchenko indicated "great gratification" at support fromWall Street. And Ambassador Francis by cable promptly informed the StateDepartment that the Red Cross commission was "working harmoniously withme," and that it would have an "excellent effect."14 Other writers haverecounted how Thompson attempted to convince the Russian peasants tosupport Kerensky by investing $1 million of his own money and U.S.government funds on the same order of magnitude in propaganda activities.Subsequently, the Committee on Civic Education in Free Russia, headed bythe revolutionary "Grandmother" Breshkovskaya, with David Soskice(Kerensky's private secretary) as executive, established newspapers, newsbureaus, printing plants, and speakers bureaus to promote the appeal —"Fight the kaiser and save the revolution." It is noteworthy that the Thompson-funded Kerensky campaign had the same appeal — "Keep Russia in the war"— as had his financ ial support of the Bolsheviks. The common link between

Thompson's support of Kerensky and his support of Trotsky and Lenin was —"continue the war against Germany" and keep Germany out of Russia.

In brief, behind and below the military, diplomatic, and political aspects of World War I, there was another battle raging, namely, a maneuvering forpostwar world economic power by international operators with significantmuscle and influence. Thompson was not a Bolshevik; he was not even pro-Bolshevik. Neither was he pro-Kerensky. Nor was he even pro-American. The

overriding motivation was the capturing of the postwar Russian market. Thiswas a commercial, not an ideological, objective. Ideology could swayrevolutionary operators like Kerensky, Trotsky, Lenin et al., but not financiers.

The Lloyd George memorandum demonstrates Thompson's partiality forneither Kerensky nor the Bolsheviks: "After the overthrow of the last Kerenskygovernment we materially aided the dissemination of the Bolshevik literature,distributing it through agents and by aeroplanes to the Germany army."15 Thiswas written in mid-December 1917, only five weeks after the start of theBolshevik Revolution, and less than four months after Thompson expressed his

78



support of Kerensky over lunch in the American embassy.

THOMPSON RETURNS TO THE UNITED STATES

Thompson then returned and toured the United States with a public plea forrecognition of the Soviets. In a speech to the Rocky Mountain Club of New York in J anuary 1918, Thompson called for assistance for the emergingBolshevik government and, appealing to an audience composed largely of Westerners, evoked the spirit of the American pioneers:

These men would not have hesitated very long about extending recognitionand giving the fullest help and sympathy to the workingman's government of Russia, because in 1819 and the years following we had out there bolshevikigovernments . . . and mighty good governments too....16

It strains the imagination to compare the pioneer experience of our Westernfrontier to the ruthless extermination of political opposition then under way inRussia. To Thompson, promoting this was no doubt looked upon as akin to hispromotion of mining stocks in days gone by. As for those in Thompson'saudience, we know not what they thought; however, no one raised achallenge. The speaker was a respected director of the Federal Reserve Bankof New York, a self-made millionaire (and that counts for much). And after all,had he not just returned from Russia? But all was not rosy. Thompson'sbiographer Hermann Hagedorn has written that Wall Street was "stunned"that his friends were "shocked" and "said he had lost his head, had turnedBolshevist himself."17

While Wall Street wondered whether he had indeed "turned Bolshevik," Thompson found sympathy among fellow directors on the board of theFederal Reserve Bank of New York. Codirec tor W. L. Saunders, chairman of Ingersoll-Rand Corporation and a direc tor of the FRB, wrote President Wilsonon October 17, 1918, stating that he was "in sympathy with the Soviet form of Government"; at the same time he disclaimed any ulterior motive such as"preparing now to get the trade of the world after the war.18

Most interesting of Thompson's fellow directors was George Foster Peabody,deputy chairman of the Federal Reserve Bank of New York and a close friend

of socialist Henry George. Peabody had made a fortune in railroadmanipulation, as Thompson had made his fortune in the manipulation of copper stocks. Peabody then became active in behalf of governmentownership of railroads, and openly adopted socialization.19 How did Peabodyreconc ile his private-enterprise success with promotion of governmentownership? According to his biographer Louis Ware, "His reasoning told himthat it was important for this form of transport to be operated as a public

79



service rather than for the advantage of private interests." This high-soundingdo-good reasoning hardly rings true. It would be more accurate to arguethat given the dominant political influence of Peabody and his fellowfinanciers in Washington, they could by government control of railroads moreeasily avoid the rigors of competition. Through political influence they could

manipulate the police power of the state to achieve what they had beenunable, or what was too costly, to achieve under private enterprise. In otherwords, the police power of the state was a means of maintaining a privatemonopoly. This was exactly as Frederick C. Howe had proposed.20 The idea of a centrally planned socialist Russia must have appealed to Peabody. Think of it — one gigantic state monopoly! And Thompson, his friend and fellowdirec tor, had the inside track with the boys running the operation!21

THE UNOFFICIAL AMBASSADORS: ROBINS, LOCKHART, AND SADOUL

The Bolsheviks for their part correctly assessed a lack of sympathy among thePetrograd representatives of the three major Western powers: the UnitedStates, Britain and France. The United States was represented by AmbassadorFrancis, undisguisedly out of sympathy with the revolution. Great Britain wasrepresented by Sir J ames Buchanan, who had strong ties to the tsaristmonarchy and was suspected of having helped along the Kerensky phase of the revolution. France was represented by Ambassador Paleologue, overtlyanti-Bolshevik. In early 1918 three additional personages made theirappearance; they became de facto representatives of these Westerncountries and edged out the officially recognized representatives.

Raymond Robins took over the Red Cross Mission from W. B. Thompson inearly December 1917 but concerned himself more with economic andpolitical matters than obtaining relief and assistance for poverty-strickenRussia. On December 26, 1917, Robins cabled Morgan partner Henry Davison,temporarily the director general of the American Red Cross: "Please urgeupon the President the necessity of our continued intercourse with theBolshevik Government."22 On J anuary 23, 1918, Robins cabled Thompson,then in New York:

Soviet Government stronger today than ever before. Its authority and power

greatly consolidated by dissolution of Constituent Assembly .... Cannot urgetoo strongly importance of prompt recognition of Bolshevik authority .... Sissonapproves this text and requests you to show this cable to C reel. Thacher andWardwell concur.23

Later in 1918, on his return to the United States, Robins submitted a report toSecretary of State Robert Lansing containing this opening paragraph:"American economic cooperation with Russia; Russia will welcome American

80



assistance in economic reconstruction."24

Robins' persistent efforts in behalf of the Bolshevik cause gave him a certainprestige in the Bolshevik camp, and perhaps even some political influence. The U.S. embassy in London c laimed in November 1918 that "Salkind owe[s]

his appointment, as Bolshevik Ambassador to Switzerland, to an American . . .no other than Mr. Raymond Robins."25 About this time reports began filteringinto Washington that Robins was himself a Bolshevik; for example, thefollowing from Copenhagen, dated December 3, 1918:

Confidential. According to a statement made by Radek to George dePatpourrie, late Austria Hungarian Consul General at Moscow, ColonelRobbins [sic], formerly thief of the American Red Cross Mission to Russia, is atpresent in Moscow negotiating with the Soviet Government and arts as theintermediary between the Bolsheviki and their friends in the United States. Theimpression seems to be in some quarters that Colonel Robbins is himself a

Bolsheviki while others maintain that he is not but that his activities in Russiahave been contrary to the interest of Associated Governments.26

Materials in the files of the Soviet Bureau in New York, and seized by the LuskCommittee in 1919, confirm that both Robins and his wife were c loselyassociated with Bolshevik ac tivities in the United States and with the formationof the Soviet Bureau in New York.27

The British government established unofficial relations with the Bolshevikregime by sending to Russia a young Russian-speaking agent, Bruce Lockhart.Lockhart was, in effect, Robins' opposite number; but unlike Robins, Lockharthad direct channels to his Foreign Office. Lockhart was not selected by theforeign secretary or the Foreign Office; both were dismayed at theappointment. According to Richard Ullman, Lockhart was "selected for hismission by Milner and Lloyd George themselves .... "Maxim Litvinov, acting asunofficial Soviet representative in Great Britain, wrote for Lockhart a letter of introduction to Trotsky; in it he called the British agent "a thoroughly honestman who understands our position and sympathizes with us.28

We have already noted the pressures on Lloyd George to take a pro-Bolshevik position, espec ially those from William B. Thompson, and thoseindirectly from Sir Basil Zaharoff and Lord Milner. Milner was, as the epigraph

to this chapter suggests, exceedingly prosocialist. Edward Crankshaw hassuccinctly outlined Milner's duality.

Some of the passages [in Milner] on industry and society . . . are passageswhich any Soc ialist would be proud to have written. But they were not writtenby a Socialist. They were written by "the man who made the Boer War." Someof the passages on Imperialism and the white man's burden might have beenwritten by a Tory diehard. They were written by the student of Karl Marx.29

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According to Lockhart, the socialist bank director Milner was a man whoinspired in him "the greatest affec tion and hero-worship."30 Lockhart recountshow Milner personally sponsored his Russian appointment, pushed it tocabinet level, and after his appointment talked "almost daily" with Lockhart.While opening the way for recognition of the Bolsheviks, Milner also promoted

financial support for their opponents in South Russia and elsewhere, as didMorgan in New York. This dual policy is consistent with the thesis that themodus operandi of the politicized internationalists — such as Milner and Thompson — was to place state money on any revolutionary orcounterrevolutionary horse that looked a possible winner. Theinternationalists, of course, claimed any subsequent benefits. The clue isperhaps in Bruce Lockhart's observation that Milner was a man who "believedin the highly organized state."31

The French government appointed an even more openly Bolsheviksympathizer, J acques Sadoul, an old friend of Trotsky.32

In sum, the Allied governments neutralized their own diplomaticrepresentatives in Petrograd and replaced them with unofficial agents moreor less sympathetic to the Bolshevists.

The reports of these unofficial ambassadors were in direct contrast to pleasfor help addressed to the West from inside Russia. Maxim Gorky protested thebetrayal of revolutionary ideals by the Lenin-Trotsky group, which hadimposed the iron grip of a police state in Russia:

We Russians make up a people that has never yet worked in freedom, that

has never yet had a chance to develop all its powers and its talents. Andwhen I think that the revolution gives us the possibility of free work, of a many-sided joy in creating, my heart is tilled with great hope and joy, even in thesecursed days that are besmirched with blood and alcohol.

There is where begins the line of my dec ided and irreconcilable separation[tom the insane actions of the People's Commissaries. I consider Maximalismin ideas very useful for the boundless Russian soul; its task is to develop in thissoul great and bold needs, to call forth the so necessary fighting spirit andactivity, to promote initiative in this indolent soul and to give it shape and lifein general.

But the prac tical Maximalism of the Anarcho-Communists and visionariesfrom the Smolny is ruinous for Russia and, above all, for the Russian workingclass. The People's Commissaries handle Russia like material for anexperiment. The Russian people is for them what the Horse is for learnedbacteriologists who inoculate the horse with typhus so that the anti-typhuslymph may develop in its blood. Now the Commissaries are trying such apredestined-to-failure experiment upon the Russian people without thinking

82



that the tormented, half-starved horse may die.

The reformers from the Smolny do not worry about Russia. They are cold-bloodedly sacrificing Russia in the name of their dream of the worldwide andEuropean revolution. And just as long as I can, I shall impress this upon the

Russian proletarian: "Thou art being led to destruction}Thou art being used asmaterial for an inhuman experiment!"33

Also in contrast to the reports of the sympathetic unofficial ambassadorswere the reports from the old-line diplomatic representatives. Typical o[ manymessages [lowing into Washington in early 1918 — particularly after WoodrowWilson's expression of support for the Bolshevik governments — was thefollowing cable [tom the U.S. legation in Bern, Switzerland:

For Polk. President's message to Consul Moscow not understood here andpeople are asking why the President expresses support of Bolsheviki, in view of rapine, murder and anarchy of these bands.34

Continued support by the Wilson administration for the Bolsheviks led to theresignation of De Witt C. Poole, the capable American charge d'affaires inArchangel (Russia):

It is my duty to explain frankly to the department the perplexity into which Ihave been thrown by the statement of Russian policy adopted by the PeaceConference, J anuary 22, on the motion of the President. The announcementvery happily recognizes the revolution and confirms again that entireabsence of sympathy for any form of counter revolution which has alwaysbeen a key note of American policy in Russia, but it contains not one [word]of condemnation for the other enemy of the revolution — the BolshevikGovernment.35

Thus even in the early days of 1918 the betrayal of the libertarian revolutionhad been noted by such acute observers as Maxim Gorky and De Witt C.Poole. Poole's resignation shook the State Department, which requested the"utmost reticence regarding your desire to resign" and stated that "it will benecessary to replace you in a natural and normal manner in order to preventgrave and perhaps disastrous effect upon the morale of American troops inthe Archangel district which might lead to loss of American lives."36

So not only did Allied governments neutralize their own government

representatives but the U.S. ignored pleas from within and without Russia tocease support of the Bolsheviks. Influential support of the Soviets cameheavily from the New York financial area (little effective support emanatedfrom domestic U.S. revolutionaries). In particular, it came from AmericanInternational Corporation, a Morgan-controlled firm.

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EXPORTING THE REVOLUTION: JACOB H. RUBIN

We are now in a position to compare two cases — not by any means theonly such cases — in which American citizens J acob Rubin and Robert Minorassisted in exporting the revolution to Europe and other parts of Russia.

J acob H. Rubin was a banker who, in his own words, "helped to form theSoviet Government of Odessa."37 Rubin was president, treasurer, andsecretary of Rubin Brothers of 19 West 34 Street, New York City. In 1917 he wasassociated with the Union Bank of Milwaukee and the Provident Loan Societyof New York. The trustees of the Provident Loan Society included personsmentioned elsewhere as having connection with the Bolshevik Revolution: P.A. Rockefeller, Mortimer L. Schiff, and J ames Speyer.

By some process — only vaguely recounted in his book I Live to Tell38 — Rubin

was in Odessa in February 1920 and became the subject of a message from

Admiral McCully to the State Department (dated February 13, 1920,861.00/6349). The message was to the effect that J acob H. Rubin of UnionBank, Milwaukee, was in Odessa and desired to remain with the Bolshevists —"Rubin does not wish to leave, has offered his services to Bolsheviks andapparently sympathizes with them." Rubin later found his way back to the U.S.and gave testimony before the House Committee on Foreign Affairs in 1921:

I had been with the American Red Cross people at Odessa. I was there whenthe Red Army took possession of Odessa. At that time I was favorably inclinedtoward the Soviet Government, because I was a socialist and had been amember of that party for 20 years. I must admit that to a certain extent I

helped to form the Soviet Government of Odessa ....39

While adding that he had been arrested as a spy by the Denikin governmentof South Russia, we learn little more about Rubin. We do, however, know agreat deal more about Robert Minor, who was caught in the act andreleased by a mechanism reminiscent of Trotsky's release from a Halifaxprisoner-of-war camp.

EXPORTING THE REVOLUTION: ROBERT MINOR

Bolshevik propaganda work in Germany,40 financed and organized byWilliam Boyce Thompson and Raymond Robins, was implemented in the fieldby American c itizens, under the supervision of Trotsky's People's Commissariatfor Foreign Affairs:

One of Trotsky's earliest innovations in the Foreign Office had been to institutea Press Bureau under Karl Radek and a Bureau of International RevolutionaryPropaganda under Boris Reinstein, among whose assistants were J ohn Reed

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ORGANIZATION OF FOREIGN PROPAGANDA WORK IN 1918

PEOPLE'S COMMISSARIAT FOR

FOREIGN AFFAIRS

(Trotsky)

PRESS BREAU

U (Radek)

BUREAU OF INTERNATIONAL REVOLUTIONAR PROPAGANDA

Y

(Reinstein) Field Operatives J ohn Reed Louis Bryant Albert Rhys

WilliamsRobert Minor Philip Price J acques Sadoul

In November 1918 Minor and Price left Russia and went to Germany.43 Theirpropaganda products were first used on the Russian Murman front; leaflets

were dropped by Bolshevik airplanes amongst British, French, and Americantroops — according to William Thompson's program.44 The dec ision to sendSadoul, Price, and Minor to Germany was made by the Central ExecutiveCommittee of the Communist Party. In Germany their activities came to thenotice of British, French, and American intelligence. On February 15, 1919,Lieutenant J . Habas of the U.S. Army was sent to Düsseldorf, then undercontrol of a Spartacist revolutionary group; he posed as a deserter from theAmerican army and offered his services to the Spartac ists. Habas got to know

86



Philip Price and Robert Minor and suggested that some pamphlets be printedfor distribution amongst American troops. The Scotland Yard report relatesthat Price and Minor had already written several pamphlets for British andAmerican troops, that Price had translated some of Wilhelm Liebknecht'sworks into English, and that both were working on additional propaganda

tracts. Habas reported that Minor and Price said they had worked together inSiberia printing an English-language Bolshevik newspaper for distribution byair among American and British troops.45

On J une 8, 1919, Robert Minor was arrested in Paris by the French police andhanded over to the American military authorities in Coblenz. Simultaneously,German Spartacists were arrested by the British military authorities in theCologne area. Subsequently, the Spartacists were convicted on charges of conspiracy to cause mutiny and sedition among Allied forces. Price wasarrested but, like Minor, speedily liberated. This hasty release was noted in theState Department:

Robert Minor has now been released, for reasons that are not quite clear,since the evidence against him appears to have been ample to secureconviction. The release will have an unfortunate effect, for Minor is believedto have been intimately connected with the IWW in America.46

The mechanism by which Robert Minor secured his release is recorded in theState Department files. The first relevant document, dated J une 12, 1919, isfrom the U.S. Paris embassy to the sec retary of state in Washington, D.C., andmarked URGENT AND CONFIDENTIAL.47 The French Foreign Office informedthe embassy that on J une 8, Robert Minor, "an American correspondent,"

had been arrested in Paris and turned over to the general headquarters of the Third American Army in Coblenz. Papers found on Minor appear "toconfirm the reports furnished on his activities. It would therefore seem to beestablished that Minor has entered into relations in Paris with the avowedpartisans of Bolshevism." The embassy regarded Minor as a "particularlydangerous man." Inquiries were being made of the American militaryauthorities; the embassy believed this to be a matter within the jurisdiction of the military alone, so that it contemplated no action although instructionswould be welcome.

On J une 14, J udge R. B. Minor in San Antonio, Texas, telegraphed Frank L.

Polk in the State Department:Press reports detention my son Robert Minor in Paris for unknown reasons.Please do a ll possible to protect him I refer to Senators from Texas.

[sgd.] R. P. Minor, District Judge, San Antonio, Texas48

Polk telegraphed J udge Minor that neither the State Department nor the WarDepartment had information on the detention of Robert Minor, and that the

87



case was now before the military authorities at Coblenz. Late on J une 13 theState Department received a "strictly confidential urgent" message from Parisreporting a statement made by the Office of Military Intelligence (Coblenz) inregard to the detention of Robert Minor: "Minor was arrested in Paris byFrench authorities upon request of British Military Intelligence and immediately

turned over to American headquarters at Coblenz."49 He was charged withwriting and disseminating Bolshevik revolutionary literature, which had beenprinted in Dusseldorf, amongst British and American troops in the areas theyoccupied. The military authorities intended to examine the charges againstMinor, and if substantiated, to try him by court-martial. If the charges werenot substantiated, it was their intention to turn Minor over to the Britishauthorities, "who originally requested that the French hand him over tothem."50 J udge Minor in Texas independently contacted Morris Sheppard, U.S.senator from Texas, and Sheppard contacted Colonel House in Paris. On J une 17, 1919, Colonel House sent the following to Senator Sheppard:

Both the American Ambassador and I are following Robert Minor's case. Aminformed that he is detained by American Military authorities at Cologne onserious charges, the exact nature of which it is difficult to discover.Nevertheless, we will take every possible step to insure just consideration forhim.51

Both Senator Sheppard and C ongressman Carlos Bee (14th District, Texas)made their interest known to the State Department. On J une 27, 1919,Congressman Bee requested facilities so that Judge Minor could send his son$350 and a message. On J uly 3 Senator Sheppard wrote Frank Polk, statingthat he was "very much interested" in the Robert Minor case, and wondering

whether State could ascertain its status, and whether Minor was properlyunder the jurisdiction of the military authorities. Then on J uly 8 the Parisembassy cabled Washington: "Confidential. Minor released by Americanauthorities . . . returning to the United States on the first available boat." Thissudden release intrigued the State Department, and on August 3 Secretary of State Lansing cabled Paris: "Secret. Referring to previous, am very anxious toobtain reasons for Minor's release by Military authorities."

Originally, U.S. Army authorities had wanted the British to try Robert Minor as"they feared politics might intervene in the United States to prevent aconviction if the prisoner was tried by American court-martial." However, theBritish government argued that Minor was a United States citizen, that theevidence showed he prepared propaganda against American troops in thefirst instance, and that, consequently — so the British Chief of Staff suggested— Minor should be tried before an American court. The British Chief of Staff did "consider it of the greatest importance to obtain a conviction if possible."52

88



Documents in the office of the Chief of Staff of the Third Army relate to theinternal details of Minor's release.53 A telegram of J une 23, 1919, from MajorGeneral Harbord, Chief of Staff of the Third Army (later chairman of the Boardof International General Electric, whose executive center, coincidentally, wasalso at 120 Broadway), to the commanding general, Third Army, stated that

Commander in Chief J ohn J . Pershing "direc ts that you suspend action in thecase against Minor pending further orders." There is also a memorandumsigned by Brigadier General W. A. Bethel in the office of the judge advocate,dated J une 28, 1919, marked "Secret and Confidential," and entitled "RobertMinor, Awaiting Trial by a Military Commission at Headquarters, 3rd Army." Thememo reviews the legal case against Minor. Among the points made byBethel is that the British were obviously reluctant to handle the Minor casebecause "they fear American opinion in the event of trial by them of anAmerican for a war offense in Europe," even though tire offense with whichMinor is charged is as serious "as a man can commit." This is a significant

statement; Minor, Price, and Sadoul were implementing a program designedby Federal Reserve Bank director Thompson, a fact confirmed by Thompson'sown memorandum (see Appendix 3). Was not therefore Thompson (andRobins), to some degree, subject to the same charges?

After interviewing Siegfried, the witness against Minor, and reviewing theevidence, Bethel commented:

I thoroughly believe Minor to be guilty, but if I was sitting in court, I would notput guilty on the evidence now available — the testimony of one man onlyand that man ac ting in the character of a detective and informer.

Bethel goes on to state that it would be known within a week or ten dayswhether substantial corroboration of Siegfried's testimony was available. If available, "I think Minor should be tried," but "if corroboration cannot be had,I think it would be better to dismiss the case."

This statement by Bethel was relayed in a different form by General Harbordin a telegram of J uly 5 to General Malin Craig (Chief of Staff, Third Army,Coblenz):

With reference to the case against Minor, unless other witnesses thanSiegfried have been located by this time C in C directs the case be droppedand Minor liberated. Please acknowledge and state action.

The reply from Craig to General Harbord (July 5) records that Minor wasliberated in Paris and adds, "This is in accordance with his own wishes andsuits our purposes." Craig also adds that other witnesseshad been obtained.

This exchange of telegrams suggests a degree of haste in dropping thecharges against Robert Minor, and haste suggests pressure. There was nosignificant attempt made to develop evidence. Intervention by Colonel

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House and General Pershing at the highest levels in Paris and the cablegramfrom Colonel House to Senator Morris Sheppard give weight to Americannewspaper reports that both House and President Wilson were responsible forMinor's hasty release without trial.54

Minor returned to the United States and, like Thompson and Robins beforehim, toured the U.S. promoting the wonders of Bolshevik Russia.

By way of summary, we find that Federal Reserve Bank director William Thompson was ac tive in promoting Bolshevik interests in several ways —production of a pamphlet in Russian, financing Bolshevik operations,speeches, organizing (with Robins) a Bolshevik revolutionary mission toGermany (and perhaps France), and with Morgan partner Lamontinfluencing Lloyd George and the British War Cabinet to effect a change inBritish policy. Further, Raymond Robins was cited by the French governmentfor organizing Russian Bolsheviks for the German revolution. We know that

Robins was undisguisedly working for Soviet interests in Russia and the UnitedStates. Finally, we find that Robert Minor, one of the revolutionarypropagandists used in Thompson's program, was released undercircumstances suggesting intervention from the highest levels of the U.S.government.

Obviously, this is but a fraction of a much wider picture. These are hardlyaccidental or random events. They constitute a coherent, continuing patternover several years. They suggest powerful influence at the summit levels of several governments.

Footnotes:

1For a biography see Hermann Hagedorn, The Magnate: William Boyce

Thompson and His Time (1869-1930) (New York: Reynal & Hitchcock, 1935).

2Polkovnik' Villiam' Boic' Thompson', "Pravda o Rossii i Bol'shevikakh" (New York:

Russian-American Publication Society, 1918).

3 J ohn Bradley, Allied Intervention in Russia (London: Weidenfeld and Nicolson,

1968.)

4 Thomas W. Lamont, Across World Frontiers (New York: Harcourt, Brace, 1959),p. 85. See also pp. 94-97 for massive breastbeating over the failure of President Wilson to act promptly to befriend the Soviet regime. CorlissLamont, his son, became a [font-line domestic leftist in the U.S.

90





21If this argument seems too farfetched, the reader should see Gabriel Kolko,

Railroads and Regulation 1877-1916 (New York: W. W. Norton, 1965), whichdescribes how pressures for government control and formation of theInterstate Commerce Commission came from the railroad owners, not fromfarmers and users of railroad services.

22C. K. Cumming and Waller W. Pettit, Russian-American Relations,

Documents and Papers (New York: Harcourt, Brace & Howe, 1920), doe. 44.

23Ibid., doc . 54.

24Ibid., doc . 92.

25U.S. State Dept. Dec imal File, 861.00/3449. But see Kennan, Russia Leaves

the War, pp. 401-5.

26Ibid., 861.00 3333.

27See chapter seven.

28Richard H. Ullman, Intervention and the War (Princeton, N.J .: Princeton

University Press, 1961), t). 61.

29Edward Crankshaw, The Forsaken Idea: A Study o! Viscount Milner (London:

Longmans Green, 1952), p. 269.

30Robert Hamilton Bruce Lockhart, British Agent (New York: Putnam's, 1933), p.

119.

31Ibid., p. 204.

32See J acques Sadoul, Notes sur la revolution bolchevique (Paris: Editions de

la sirene, 1919).

34U.S. State Dept. Decimal File, 861.00/1305, March 15, 1918.

35Ibid., 861.00/3804.

36Ibid.

37U.S., House, Committee on Foreign Affairs, Conditions in Russia, 66th Cong.,

3d sess., 1921.

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Chapter VII

THE BOLSHEVIKS RETURN TO NEW YORK

Martens is very much in the limelight. There appears to be no doubt about hisconnection with the Guarantee [sic] Trust Company, Though it is surprisingthat so large and influential an enterprise should have dealings with aBolshevik concern.

Scotland Yard Intelligence Report, London, 19191

Following on the initial successes of the revolution, the Soviets wasted littletime in attempting through former U.S. residents to establish diplomaticrelations with and propaganda outlets in the United States. In J une 1918 theAmerican consul in Harbin cabled Washington:

Albert R. Williams, bearer Department passport 52,913 May 15, 1917proceeding United States to establish information bureau for SovietGovernment for which he has written authority. Shall I visa?2

Washington denied the visa and so Williams was unsuccessful in his attemptto establish an information bureau here. Williams was followed by AlexanderNyberg (alias Santeri Nuorteva), a former Finnish immigrant to the UnitedStates in J anuary 1912, who became the first operative Soviet representativein the United States. Nyberg was an activtive propagandist. In fact, in 1919 bewas, according to J . Edgar Hoover (in a letter to the U.S. Committee onForeign Affairs), "the forerunner of LCAK Martens anti with Gregory Weinsteinthe most active individual of official Bolshevik propaganda in the UnitedStates."3

Nyberg was none too successful as a diplomatic representative or, ultimately,as a propagandist. The State Departmment files record an interview withNyberg by the counselors' office, dated J anuary 29, 1919. Nyberg wasaccompanied by H. Kellogg, described as "an American citizen, graduate of Harvard," and, more surprisingly, by a Mr. McFarland, an attorney for theHearst organization. The State Department records show that Nyberg made"many misstatements in regard to the attitude to the Bolshevik Government"

and claimed that Peters, the Lett terrorist police chief in Petrograd, wasmerely a "kind-hearted poet." Nyberg requested the department to cableLenin, "on the theory that it might be helpful in bringing about theconference proposed by the Allies at Paris."4 The proposed message, arambling appeal to Lenin to gain international acceptance appearing at theParis Conference, was not sent.5

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A RAID ON THE SOVIET BUREAU IN NEW YORK

Alexander Nyberg (Nuorteva) was then let go and replaced by the SovietBureau, which was established in early 1919 in the World Tower Building, 110West 40 Street, New York City. The bureau was headed by a German citizen,

Ludwig C . A. K. Martens, who is usually billed as the first ambassador of theSoviet Union in the United States, and who, up to that time, had been vicepresident of Weinberg & Posner, an engineering firm located at 120Broadway, New York City. Why the "ambassador" and his offices werelocated in New York rather than in Washington, D.C. was not explained; itdoes suggest that trade rather than diplomacy was its primary objective. Inany event, the bureau promptly issued a call lot Russian trade with the UnitedStates. Industry had collapsed and Russia direly needed machinery, railwaygoods, clothing, chemicals, drugs — indeed, everything utilized by a moderncivilization. In exchange the Soviets offered gold and raw materials. TheSoviet Bureau then proceeded to arrange contracts with American firms,ignoring the facts of the embargo and nonrecognition. At the same time itwas providing financ ial support for the emerging Communist Party U.S.A.6

On May 7, 1919, the State Department slapped down business intervention inbehalf of the bureau (noted elsewhere),7 and repudiated Ludwig Martens,the Soviet Bureau, and the Bolshevik government o1 Russia. This officialrebuttal did not deter the eager order-hunters in American industry. When theSoviet Bureau offices were raided on J une 12, 1919, by representatives of theLusk Committee of the state of New York, files of letters to and from Americanbusinessmen, representing almost a thousand firms, were unearthed. The

British Home Office Direc torate of Intelligence "Special Report No. 5 (Secret),"issued from Scotland Yard, London, J uly 14, 1919, and written by Basil H. Thompson, was based on this seized material; the report noted:

. . . Every effort was made from the first by Martens and his associates toarouse the interest of American capitalists and there are grounds totbelieving that the Bureau has received financial support from some Russianexport firms, as well as from the Guarantee [sic] Trust Company, although thisfirm has denied the allegation that it is financing Martens' organisation.8

It was noted by Thompson that the monthly rent of the Soviet Bureau officeswas $300 and the office salaries came to about $4,000. Martens' funds to pay

these bills came partly from Soviet couriers — such as John Reed and MichaelGruzenberg — who brought diamonds from Russia for sale in the U.S., andpartly from American business firms, including the Guaranty Trust Company of New York. The British reports summarized the files seized by the Luskinvestigators from the bureau offices, and this summary is worth quoting in full:

(1) There was an intrigue afoot about the time the President first went toFrance to get the Administration to use Nuorteva as an intermediary with the

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Martens boasted to the news media and C ongress that big corporations, theChicago packers among them, were aiding the Soviets:

Affording to Martens, instead of farthing on propaganda among the radicalsand the proletariat he has addressed most of his efforts to winning to the sideof Russia the big business and manufacturing interests of this country, thepackers, the United States Steel Corporation, the Standard Oil Company andother big concerns engaged in international trade. Martens asserted thatmost of the big business houses of the country were aiding him in his effort toget the government to recognize the Soviet government.16

This claim was expanded by A. A. Heller, commercial attache at the SovietBureau:

"Among the people helping us to get recognition from the State Departmentare the big C hit ago packers, Armour, Swift, Nelson Morris and C udahy .....Among the other firms are . . . the American Steel Export Company, the

Lehigh Machine Company, the Adrian Knitting Company, the InternationalHarvester Company, the Aluminum Goods Manufacturing Company, theAluminum Company of America, the American Car and Foundry ExportCompany, M.C.D. Borden & Sons."17

The New York Times followed up these claims and reported comments of thefirms named. "I have never heard of this man [Martens] before in my life,"declared G. F. Swift, J r., in charge of the export department of Swift & Co."Most certainly I am sure that we have never had any dealings with him of any kind."18 The Times added that O. H. Swift, the only other member of thefirm that could be contacted, "also denied any knowledge whatever of

Martens or his bureau in New York." The Swift statement was evasive at best.When the Lusk Committee investigators seized the Soviet Bureau files, theyfound correspondence between the bureau and almost all the firms namedby Martens and Heller. The "list of firms that offered to do business with RussianSoviet Bureau," compiled from these files, included an entry (page 16), "Swiftand Company, Union Stock Yards, Chicago, Ill." In other words, Swift had

been in communication with Martens despite its denial to the New York

Times.

The New York Times contac ted United States Steel and reported, "J udgeElbert H. Gary said last night that there was no foundation for the statement

with the Soviet representative here had had any dealings with the UnitedStates Steel Corporation." This is technically correc t. The United States SteelCorporation is not listed in the Soviet files, but the list does contain (page 16)an affiliate, "United States Steel Products Co., 30 Church Street, New YorkCity."

The Lusk Committee list records the following about other firms mentioned byMartens and Heller: Standard Oil — not listed. Armour 8c Co., meatpackers —

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listed as "Armour Leather" and "Armour & Co. Union Stock Yards, Chicago."Morris Go., meatpackers, is listed on page 13. Cudahy — listed on page 6.American Steel Export Co. — listed on page 2 as located at the WoolworthBuilding; it had offered to trade with the USSR. Lehigh Machine Co. — notlisted. Adrian Knitting Co. — listed on page 1. International Harvester Co. —

listed on page 11. Aluminum Goods Manufacturing Co. — listed on page 1.Aluminum Company of America — not listed. American Car and FoundryExport — the closest listing is "American Car Co. — Philadelphia." M.C.D.Borden 8c Sons — listed as located at 90 Worth Street, on page 4.

Then on Saturday, J une 21, 1919, Santeri Nuorteva (Alexander Nyberg)confirmed in a press interview the role of International Harvester:

Q: [by New York Times reporter]: What is your business?

A: Purchasing director tot Soviet Russia.

Q: What did you do to accomplish this?

A: Addressed myself to American manufacturers.

Q: Name them.

A: International Harvester Corporation is among them.

Q: Whom did you see?

A:Mr. Koenig.Q: Did you go to see him?

A: Yes.

Q: Give more names.

A: I went to see so many, about 500 people and I can't remember all thenames. We have files in the office disclosing them.19

In brief, the claims by Heller and Martens relating to their widespreadcontacts among certain U.S. firms20 were substantiated by the office files of the Soviet Bureau. On the other hand, for their own good reasons, these firmsappeared unwilling to confirm their activities.

EUROPEAN BANKERS AID THE BOLSHEVIKS

In addition to Guaranty Trust and the private banker Boissevain in New York,some European bankers gave direct help to maintain and expand theBolshevik hold on Russia. A 1918 State Department report from our Stockholm

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embassy details these financial transfers. The department commended itsauthor, stating that his "reports on conditions in Russia, the spread of Bolshevism in Europe, and financial questions . . . have proved most helpful tothe Department. Department is much gratified by your capable handling of the legation's business."21 According to this report, one of these "Bolshevik

bankers" acting in behalf of the emerging Soviet regime was DmitriRubenstein, of the former Russo-French bank in Petrograd. Rubenstein, anassociate of the notorious Grigori Rasputin, had been jailed inprerevolutionary Petrograd in connection with the sale of the Second RussianLife Insurance Company. The American manager and director of the SecondRussian Life Insurance Company was J ohn MacGregor Grant, who waslocated at 120 Broadway, New York City. Grant was also the New Yorkrepresentative of Putiloff's Banque Russo-Asiatique. In August 1918 Grant was(for unknown reasons) listed on the Military Intelligence Bureau "suspec t list."22 This may have occurred because Olof Aschberg in early 1918 reported

opening a foreign credit in Petrograd "with the J ohn MacGregor Grant Co.,export concern, which it [Aschberg] finances in Sweden and which isfinanced in America by the Guarantee [sic] Trust Co."23 After the revolutionDmitri Rubenstein moved to Stockholm and became financial agent for theBolsheviks. The State Department noted that while Rubenstein was "not aBolshevik, he has been unscrupulous in moneT' making, and it is suspectedthat he may be making the contemplated visit to America in Bolshevikinterest and for Bolshevik pay.24

Another Stockholm "Bolshevik banker" was Abram Givatovzo, brother-in-lawof Trotsky and Lev Kamenev. The State Department report asserted that while

Givatovzo pretended to be "very anti-Bolshevik," he had in fact received"large sums" of moneT' from the Bolsheviks by courier for financingrevolutionary operations. Givatovzo was part of a syndicate that includedDenisoff of the former Siberian bank, Kamenka of the Asoff Don Bank, andDavidoff of the Bank of Foreign C ommerce. This syndicate sold the assets of the former Siberian Bank to the British government.

Yet another tsarist private banker, Gregory Lessine, handled Bolshevikbusiness through the firm of Dardel and Hagborg. Other "Bolshevik bankers"named in the report are stirrer and J akob Berline, who previously controlled,through his wife, the Petrograd Nelkens Bank. Isidor Kon was used by thesebankers as an agent.

The most interesting of these Europe-based bankers operating in behalf of the Bolsheviks was Gregory Benenson, formerly chairman in Petrograd of theRussian and English Bank — a bank which included on its board of directorsLord Balfour (secretary of state for foreign affairs in England) and Sir I. M. H.Amory, as well as S. H. Cripps and H. Guedalla. Benenson traveled to

101



Petrograd after the revolution, then on to Stockholm. He came. said oneState Department official, "bringing to my knowledge ten million rubles withhim as he offered them to me at a high price for the use of our EmbassyArchangel." Benenson had an arrangement with the Bolsheviks to exchangesixty million rubles for £1.5 million sterling.

In J anuary 1919 the private bankers in Copenhagen that were assoc iatedwith Bolshevik institutions became alarmed by rumors that the Danish politicalpolice had marked the Soviet legation and those persons in contact with theBolsheviks for expulsion from Denmark. These bankers and the legation hastilyattempted to remove their funds from Danish banks — in particular, sevenmillion rubles from the Revisionsbanken.25 Also, confidential documents werehidden in the offices of the Martin Larsen Insurance Company.

Consequently, we can identify a pattern of assistance by capitalist bankersfor the Soviet Union. Some of these were American bankers, some were tsarist

bankers who were exiled and living in Europe, and some were Europeanbankers. Their common objective was profit, not ideology.

The questionable aspects of the work of these "Bolshevik bankers," as theywere called, arises from the framework of contemporary events in Russia. In1919 French, British, and American troops were fighting Soviet troops in theArchangel region. In one clash in April 1919, for example, Americancasualties were one officer, .five men killed, and nine missing.26 Indeed, atone point in 1919 General Tasker H. Bliss, the U.S. commander in Archangel,affirmed the British statement that "Allied troops in the Murmansk andArchangel districts were in danger of extermination unless they were speedilyreinforced."27 Reinforcements were then on the way under the command of Brigadier General W. P. Richardson.

In brief, while Guaranty Trust and first-rank American firms were assisting theformation of the Soviet Bureau in New York, American troops were in conflictwith Soviet troops in North Russia. Moreover, these conflicts were dailyreported in the New York Times, presumably read by these bankers andbusinessmen. Further, as we shall see in chapter ten, the financ ial circles thatwere supporting the Soviet Bureau in New York also formed in New York the"United Americans" — a virulently anti-Communist organization predicting

bloody revolution, mass starvation, and panic in the streets of New York.

Footnotes:

1Copy in U.S. State Dept. Dec imal File, 316-22-656.

2Ibid., 861.00/1970.

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3U.S., House, Committee on Foreign Affairs, Conditions in Russia, 66th Cong.,

3d sess., 1921, p. 78.

4U.S. State Dept. Decimal File, 316-19-1120.

5Ibid.

6See Benjamin Gitlow, [U.S., House, Un-American Propaganda Activities

(Washington, 1939), vols. 7-8, p. 4539.

7See p. 119.

8Copy in [U.S. State Dept. Decimal File, 316-22-656. Confirmation of Guaranty

Trust involvement tomes in later intelligence reports.

9On Frederick C. Howe see pp. 16, 177, for an early statement of the mannerin which financ iers use society and its problems for their own ends; on FelixFrankfurter, later Supreme Court justice, see Appendix 3 for an earlyFrankfurter letter to Nuorteva; on Raymond Robins see p. 100.

10 The Lusk Committee list of personnel in the Soviet Bureau is printed in

Appendix 3. The list includes Kenneth Durant, aide to Colonel House; DudleyField Malone, appointed by President Wilson as collector of customs for thePort of New York; and Morris Hillquit, the financial intermediary between New York banker Eugene Boissevain on the one hand, and J ohn Reed and Soviet

agent Michael Gruzenberg on the other.11 J ulius Hammer was the father of Armand Hammer, who today is chairman

of the Occidental Petroleum Corp. of Los Angeles.

12See Appendix 3.

13V. I. Lenin, Polnoe Sobranie Sochinenii, 5th ed. (Moscow, 1958), 53:267.

14U.S., House, Committee. on Foreign Affairs, Conditions in Russia, 66th Cong.,

3d sess., 1921, p. 75. "Bill" was William Bobroff, Soviet agent.15

Ibid., p. 78.

16New York Times, November 17, 1919.

17Ibid.

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18Ibid.

19New York Times, J une 21, 1919.

20

See p. 119.21

U.S. State Dept. Decimal File, 861.51/411, November 23, 1918.

22Ibid., 316-125-1212.

23U.S., Department of State, Foreign Relations o! the United States: 1918,

Russia, 1:373.

24U.S. State Dept. Decimal File, 861.00/4878, J uly,' 21, 1919.

25Ibid., 316-21-115/21.

26New York Times, April 5, 1919.

27Ibid.

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I felt very good over getting Sabin. The Guaranty Trust is altogether the mostactive competitor we have in the field and it is of great value to get theminto the fold in this way. They have been particularly enthusiastic at Kuhn,Loeb's. They want to take up to $2,500,000. There was really quite a littlecompetition to see who should get on the board, but as I had happened to

talk with Kahn and had invited him first, it was decided he should go on. He isperhaps the most enthusiastic of any one. They want half a million stock for SirErnest Castle** to whom they have cabled the plan and they have backfrom him approval of it.

I explained the whole matter to the Board [of the C ity Bank] Tuesday and gotnothing but favorable comments.6

Everybody coveted the AIC stock. Joe Grace (of W. R. Grace & Co.) wanted$600,000 in addition to his interest in National City Bank. Ambrose Monellwanted $500,000. George Baker wanted $250,000. And "William Rockefeller

tried, vainly, to get me to put him down for $5,000,000 of the common."7

By 1916 AIC investments overseas amounted to more than $23 million and in1917 to more than $27 million. The company established representation inLondon, Paris, Buenos Aires, and Peking as well as in Petrograd, Russia. Lessthan two years after its formation AIC was operating on a substantial scale inAustralia, Argentina, Uruguay, Paraguay, Colombia, Brazil, Chile, China, J apan, India, Ceylon, Italy, Switzerland, France, Spain, Cuba, Mexico, andother countries in Central America.

American International owned several subsidiary companies outright, had

substantial interests in yet other companies, and operated still other firms inthe United States and abroad. The Allied Machinery Company of Americawas founded in February 1916 and the entire share capital taken up byAmerican International Corporation. The vice president of AmericanInternational Corporation was Frederick Holbrook, an engineer and formerlyhead of the Holbrook Cabot & Rollins Corporation. In J anuary 1917 the GraceRussian Company was formed, the joint owners being W. R. Grace & Co. andthe San Galli Trading Company of Petrograd. American InternationalCorporation had a substantial investment in the Grace Russian Companyand through Holbrook an interlocking direc torship.

AIC also invested in United Fruit Company, which was involved in CentralAmerican revolutions in the 1920s. The American International ShipbuildingCorporation was wholly owned by AIC and signed substantial contracts forwar vessels with the Emergency Fleet Corporation: one contract called forfifty vessels, followed by another contract for forty vessels, followed by yetanother contract for sixty cargo vessels. American International Shipbuildingwas the largest single recipient of contracts awarded by the U.S. government

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THE INFLUENCE OF AMERICAN INTERNATIONAL ON THE REVOLUTION

Having identified the directors of AIC we now have to identify theirrevolutionary influence.

As the Bolshevik Revolution took hold in central Russia, Secretary of StateRobert Lansing requested the views of American International Corporation onthe policy to be pursued towards the Soviet regime. On J anuary 16, 1918 —barely two months after the takeover in Petrograd and Moscow, and beforea fraction of Russia had come under Bolshevik control — William FranklinSands, executive secretary of American International Corporation, submittedthe requested memorandum on the Russian political situation to SecretaryLansing. Sands covering letter, headed 120 Broadway, began:

To the Honourable J anuary 16, 1918

Secretary of State Washington D.C.

Sir

I have the honor to enclose herewith the memorandum which you requestedme to make for you on my view of the political situation in Russia.

I have separated it into three parts; an explanation of the historical causes of the Revolution, told as briefly as possible; a suggestion as to policy and arec ital of the various branches of American activity at work now in Russia ....8

Although the Bolsheviks had only precarious control in Russia — and indeedwere to come near to losing even this in the spring of 1918 — Sands wrote

that already (J anuary 1918) the United States had delayed too long inrecognizing "Trotzky." He added, "Whatever ground may have been lost,should be regained now, even at the cost of a slight personal triumph for Trotzky."9

Firms located at, or near, 120 Broadway:

American International Corp 120 Broadway National City Bank 55 Wall StreetBankers Trust Co Bldg 14 Wall Street New York Stock Exchange 13 WallStreet/12 Broad Morgan Building corner Wall & Broad Federal Reserve Bank of NY 120 Broadway Equitable Building 120 Broadway Bankers Club 120Broadway Simpson, Thather & Bartlett 62 Cedar St William Boyce Thompson14 Wall Street Hazen, Whipple & Fuller 42nd Street Building Chase NationalBank 57 Broadway McCann Co 61 Broadway Stetson, J ennings & Russell 15Broad Street Guggenheim Exploration 120 Broadway Weinberg & Posner 120Broadway Soviet Bureau 110 West 40th Street J ohn MacGregor Grant Co 120Broadway Stone & Webster 120 Broadway General Electric Co 120 BroadwayMorris Plan of NY 120 Broadway Sinclair Gulf Corp 120 Broadway Guaranty

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Securities 120 Broadway Guaranty Trust 140 Broadway

Map of Wall Street Area Showing Office Locations

Sands then elaborates the manner in which the U.S. could make up for losttime, parallels the Bolshevik Revolution to "our own revolution," andconcludes: "I have every reason to believe that the Administration plans forRussia will receive all possible support from Congress, and the heartyendorsement of public opinion in the United States."

In brief, Sands, as executive secretary of a corporation whose directors werethe most prestigious on Wall Street, provided an emphatic endorsement of the Bolsheviks and the Bolshevik Revolution, and within a matter of weeksafter the revolution started. And as a director of the Federal Reserve Bank of New York, Sands had just contributed $1 million to the Bolsheviks — suchendorsement of the Bolsheviks by banking interests is at least consistent.

Moreover, William Sands of American International was a man with trulyuncommon connections and influence in the State Department.

Sands' career had alternated between the State Department and WallStreet, In the late nineteenth and early twentieth century he held various U.S.diplomatic posts. In 1910 he left the department to join the banking firm of J ames Speyer to negotiate an Ecuadorian loan, and for the next two yearsrepresented the Central Aguirre Sugar Company in Puerto Rico. In 1916 hewas in Russia on "Red Cross work" — actually a two-man "Special Mission" with

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Basil Miles — and returned to join the American International Corporation inNew York.10

In early 1918 Sands became the known and intended recipient of certainRussian "secret treaties." If the State Department files are to be believed, it

appears that Sands was also a courier, and that he had some prior access toofficial documents — prior, that is, to U.S. government officials. On J anuary14, 1918, just two days before Sands wrote his memo on policy towards theBolsheviks, Secretary Lansing caused the following cable to be sent in GreenCipher to the American legation in Stockholm: "Important official papers forSands to bring here were left at Legation. Have you forwarded them?Lansing." The reply of J anuary 16 from Morris in Stockholm reads: "Your 460 J anuary 14, 5 pm. Said documents forwarded Department in pouch number34 on December 28th." To these documents is attached another memo,signed "BM" (Basil Miles, an associate of Sands): "Mr. Phillips. They failed to giveSands 1st installment of sec ret treaties wh. [which] he brought from Petrogradto Stockholm."11

Putting aside the question why a private c itizen would be carrying Russiansecret treaties and the question of the content of such secret treaties(probably an early version of the so-called Sisson Documents), we can atleast deduce that the AIC executive secretary traveled from Petrograd toStockholm in late 1917 and must indeed have been a privileged andinfluential citizen to have access to sec ret treaties.12

A few months later, on J uly 1, 1918, Sands wrote to Treasury SecretaryMcAdoo suggesting a commission for "economic assistance to Russia." Heurged that since it would be difficult for a government commission to"provide the machinery" for any such assistance, "it seems, therefore,necessary to call in the financial, commercial and manufacturing interest of the United States to provide such machinery under the control of the C hief Commissioner or whatever official is selected by the President for thispurpose."13 In other words, Sands obviously intended that any commercialexploitation of Bolshevik Russia was going to include 120 Broadway.

THE FEDERAL RESERVE BANK OF NEW YORK

The certification of incorporation of the Federal Reserve Bank of New Yorkwas filed May 18, 1914. It provided for three Class A directors representingmember banks in the district, three C lass B directors representing commerce,agriculture, and industry, and three Class C direc tors representing the FederalReserve Board. The original direc tors were elected in 1914; they proceededto generate an energetic program. In the first year of organization the

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Federal Reserve Bank of New York held no fewer than 50 meetings.

From our viewpoint what is interesting is the association between, on the onehand, the directors of the Federal Reserve Bank (in the New York district) andof American International Corporation, and, on the other, the emerging

Soviet Russia.

In 1917 the three Class A directors were Franklin D. Locke, William Woodward,and Robert H. Treman. William Woodward was a director of AmericanInternational Corporation (120 Broadway) and of the Rockefeller-controlledHanover National Bank. Neither Locke nor Treman enters our story. The threeClass B directors in 1917 were William Boyce Thompson, Henry R. Towne, andLeslie R. Palmer. We have already noted William B. Thompson's substantialcash contribution to the Bolshevik cause. Henry R. Towne was chairman of the board of directors of the Morris Plan of New York, located at 120Broadway; his seat was later taken by Charles A. Stone of American

International Corporation (120 Broadway) and of Stone & Webster (120Broadway). Leslie R. Palmer does not come into our story. The three Class Cdirec tors were Pierre J ay, W. L. Saunders, and George Foster Peabody.Nothing is known about Pierre J ay, except that his office was at 120Broadway and he appeared to be significant only as the owner of BrearleySchool, Ltd. William Lawrence Saunders was also a director of AmericanInternational Corporation; he openly avowed, as we have seen, pro-Bolshevik sympathies, disclosing them in a letter to President Woodrow Wilson(see page 15). George Foster Peabody was an active soc ialist (see page 99-100).

In brief, of the nine directors of the Federal Reserve Bank of New York, fourwere physically located at 120 Broadway and two were then connected withAmerican International Corporation. And at least four members of AIC'sboard were at one time or another directors of the FRB of New York. Wecould term all of this significant, but regard it not necessarily as a dominantinterest.

AMERICAN-RUSSIAN INDUSTRIAL SYNDICATE INC.

William Franklin Sands' proposal for an economic commission to Russia wasnot adopted. Instead, a private vehicle was put together to exploit Russianmarkets and the earlier support given the Bolsheviks. A group of industrialistsfrom 120 Broadway formed the American-Russian Industrial Syndicate Inc. todevelop and foster these opportunities. The financial backing for the new firmcame from the Guggenheim Brothers, 120 Broadway, previously associatedwith William Boyce Thompson (Guggenheim controlled American Smelting

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and Refining, and the Kennecott and Utah copper companies); from Harry F.Sinclair, president of Sinclair Gulf Corp., also 120 Broadway; and from J amesG. White of J . G. White Engineering Corp. of 43 Exchange Place — theaddress of the American-Russian Industrial Syndicate.

In the fall of 1919 the U.S. embassy in London cabled Washington aboutMessrs. Lubovitch and Rossi "representing American-Russian IndustrialSyndicate Incorporated What is the reputation and the attitude of theDepartment toward the syndicate and the individuals?"14

To this cable State Department officer Basil Miles, a former assoc iate of Sands, replied:

. . . Gentlemen mentioned together with their corporation are of goodstanding being backed financially by the White, Sinclair and Guggenheiminterests for the purpose of opening up business relations with Russia.15

So we may conclude that Wall Street interests had quite definite ideas of themanner in which the new Russian market was to be exploited. The assistanceand advice proffered in behalf of the Bolsheviks by interested parties inWashington and elsewhere were not to remain unrewarded.

JOHN REED: ESTABLISHMENT REVOLUTIONARY

Quite apart from American International's influence in the State Departmentis its intimate relationship — which AIC itself called "control" — with a knownBolshevik: John Reed. Reed was a prolific, widely read author of the WorldWar I era who contributed to the Bolshevik-oriented Masses.16 and to theMorgan-controlled journal Metropolitan. Reed's book on the BolshevikRevolution, Ten Days That Shook the World, sports an introduction by NikolaiLenin, and became Reed's best-known and most widely read literary effort. Today the book reads like a superficial commentary on current events, isinterspersed with Bolshevik proclamations and decrees, and is permeatedwith that mystic fervor the Bolsheviks know will arouse foreign sympathizers.After the revolution Reed became an American member of the executivecommittee of the Third International. He died of typhus in Russia in 1920.

The crucial issue that presents itself here is not Reed's known pro-Bolsheviktenor and activities, but how Reed who had the entire confidence of Lenin("Here is a book I should like to see published in millions of copies andtranslated into all languages," commented Lenin in Ten Days), who was amember of the Third International, and who possessed a MilitaryRevolutionary Committee pass (No. 955, issued November 16, 1917) givinghim entry into the Smolny Institute (the revolutionary headquarters) at anytime as the representative of the "American Socialist press," was also —

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despite these things — a puppet under the "control" of the Morgan financialinterests through the American International Corporation. Documentaryevidence exists for this seeming conflict (see below and Appendix 3).

Let's fill in the background. Articles for the Metropolitan and the Masses gave

J ohn Reed a wide audience for reporting the Mexican and the RussianBolshevik revolutions. Reed's biographer Granville Hicks has suggested, in J ohn Reed, that "he was . . . the spokesman of the Bolsheviks in the UnitedStates." On the other hand, Reed's financial support from 1913 to 1918 cameheavily from the Metropolitan — owned by Harry Payne Whitney, a directorof the Guaranty Trust, an institution c ited in every chapter of this book — andalso' from the New York private banker and merchant Eugene Boissevain,who channeled funds to Reed both directly and through the pro-BolshevikMasses. In other words, J ohn Reed's financial support came from twosupposedly competing elements in the political spectrum. These funds werefor writing and may be classified as: payments from Metropolitan from 1913onwards for articles; payments from Masses from 1913 onwards, whichincome at least in part originated with Eugene Boissevain. A third categoryshould be mentioned: Reed received some minor and apparentlyunconnected payments from Red Cross commissioner Raymond Robins inPetrograd. Presumably he also received smaller sums for articles written forother journals, and book royalties; but no evidence has been found givingthe amounts of such payments.

JOHN REED AND THEMETROPOLITAN MAGAZINE

The Metropolitan supported contemporary establishment causes including,for example, war preparedness. The magazine was owned by Harry PayneWhitney (1872-1930), who founded the Navy League and was partner in the J .P. Morgan firm. In the late 1890s Whitney became a director of AmericanSmelting and Refining and of Guggenheim Exploration. Upon his father'sdeath in 1908, he became a director of numerous other companies,including Guaranty Trust Company. Reed began writing for Whitney'sMetropolitan in J uly 1913 and contributed a half-dozen articles on theMexican revolutions: "With Villa in Mexico," "The C auses Behind/Mexico's

Revolution," "If We Enter Mexico," "With Villa on the March," etc. Reed'ssympathies were with revolutionist Pancho Villa. You will recall the link (seepage 65) between Guaranty Trust and Villa's ammunition supplies.

In any event, Metropolitan was Reed's main source of income. In the words of biographer Granville Hicks, "Money meant primarily work for the Metropolitan

and incidentally articles and stories for other paying magazines." Butemployment by Metropolitan did not inhibit Reed from writing articles critical

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of the Morgan and Rockefeller interests. One such piece, "At the Throat of theRepublic" (Masses, J uly 1916), traced the relationship between munitionsindustries, the national security-preparedness lobby, the interlockingdirectorates of the Morgan-Rockefeller interest, "and showed that theydominated both the preparedness soc ieties and the newly formed American

International Corporation, organized for the exploitation of backwardcountries."17

In 1915 J ohn Reed was arrested in Russia by tsarist authorities, and theMetropolitan intervened with the State Department in Reed's behalf. On J une21, 1915, H. J . Whigham wrote Secretary of State Robert Lansing informing himthat J ohn Reed and Boardman Robinson (also arrested and also acontributor to the Masses) were in Russia "with commission from theMetropolitan magazine to write articles and to make illustrations in theEastern field of the War." Whigham pointed out that neither had "any desireor authority from us to interfere with the operations of any belligerent powersthat be." Whigham's letter continues:

If Mr. Reed carried letters of introduction from Bucharest to people in Galiciaof an anti-Russian frame of mind I am sure that it was done innocently withthe simple intention of meeting as many people as possible ....

Whigham points out to Sec retary Lansing that John Reed was known at theWhite House and had given "some assistance" to the administration onMexican affairs; he concludes: "We have the highest regard for Reed's greatqualities as a writer and thinker and we are very anxious as regards hissafety."18 The Whigham letter is not, let it be noted, from an establishment

journal in support of a Bolshevik writer; it is from an establishment journal insupport of a Bolshevik writer for the Masses and similar revolutionary sheets, awriter who was also the author of trenchant attacks ("The Involuntary Ethics of Big Business: A Fable for Pessimists," for example) on the same Morganinterests that owned Metropolitan.

The evidence of finance by the private banker Boissevain is incontrovertible.On February 23, 1918, the American legation at Christiania, Norway, sent acable to Washington in behalf of J ohn Reed for delivery to Soc ialist Partyleader Morris Hillquit. The cable stated in part: "Tell Boissevain must draw onhim but carefully." A cryptic note by Basil Miles in the State Department files,

dated April 3, 1918, states, "If Reed is coming home he might as well havemoney. I understand alternatives are ejec tion by Norway or polite return. If this so latter seems preferable." This protective note is followed by a cabledated April 1, 1918, and again from the American legation at Christiania:"J ohn Reed urgently request Eugene Boissevain, 29 Williams Street, New York,telegraph care legation $300.00."19 This cable was relayed to EugeneBoissevain by the State Department on April 3, 1918.

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Reed apparently received his funds and arrived safely back in the UnitedStates. The next document in the State Department files is a letter to WilliamFranklin Sands from J ohn Reed, dated J une 4, 1918, and written fromCrotonon-Hudson, New York. In the letter Reed asserts that he has drawn upa memorandum for the State Department, and appeals to Sands to use his

influence to get release of the boxes of papers brought back from Russia.Reed concludes, "Forgive me for bothering you, but I don't know where elseto turn, and I can't afford another trip to Washington." Subsequently, FrankPolk, acting secretary of state, received a letter from Sands regarding therelease of J ohn Reed's papers. Sands' letter, dated J une 5, 1918, from 120Broadway, is here reproduced in full; it makes quite explicit statements aboutcontrol of Reed:

120 BROADWAY NEW YORK

J une fifth, 1918

My dear Mr. Polk:

I take the liberty of enclosing to you an appeal from J ohn ("J ack") Reed tohelp him, if possible, to secure the release of the papers which he broughtinto the country with him from Russia.

I had a conversation with Mr. Reed when he first arrived, in which hesketched certain attempts by the Soviet Government to initiate constructivedevelopment, and expressed the desire to place whatever observations hehad made or information he had obtained through his connection with Leon Trotzky, at the disposal of our Government. I suggested that he write amemorandum on this subject for you, and promised to telephone toWashington to ask you to give him an interview for this purpose. He broughthome with him a mass of papers which were taken from him for examination,and on this subject also he wished to speak to someone in authority, in orderto voluntarily offer an>, information they might contain to the Government,and to ask for the release of those which he needed for his newspaper andmagazine work.

I do not believe that Mr. Reed is either a "Bolshevik" or a "dangerousanarchist," as I have heard him described. He is a sensational journalist,

without doubt, but that is all. He is not trying to embarrass our Government,and for this reason refused the "protection" which I understand was offered tohim by Trotzky, when he returned to New York to face the indictment againsthim in the "Masses" trial. He is liked by the Petrograd Bolsheviki, however, and,therefore, anything which our police may do which looks like "persecution"will be resented in Petrograd, which I believe to be undesirable becauseunnecessary. He can be handled and controlled much better by other

means than through the police.

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I have not seen the memorandum he gave to Mr. Bullitt — I wanted him to let

me see it first and perhaps to edit it, but he had not the opportunity to do so.

I hope that you will not consider me to be intrusive in this matter or meddlingwith matters which do not concern me. I believe it to be wise not to offend

the Bolshevik leaders unless and until it may become necessary to do so — if it should become necessary — and it is unwise to look on every one as asuspicious or even dangerous character, who has had friendly relations withthe Bolsheviki in Russia. I think it better policy to attempt to use such people

for our own purposes in developing our policy toward Russia, if it is possible to

do so. The lecture which Reed was prevented by the police from delivering inPhiladelphia (he lost his head, came into conflict with the police and wasarrested) is the only lecture on Russia which I would have paid to hear, if Ihad not already seen his notes on the subject. It covered a subject which wemight quite possibly find to be a point of contact with the SovietGovernment, from which to begin constructive work!

Can we not use him, instead of embittering him and making him an enemy?He is not well balanced, but he is, unless I am very much mistaken,susceptible to discreet guidance and might be quite useful.

Sincerely yours, William Franklin Sands

The Honourable Frank Lyon Polk Counselor for the Department of StateWashington, D.C.

WFS:AO Enclosure20

The significance of this document is the hard revelation of direc t interventionby an officer (executive secretary) of American International Corporation inbehalf of a known Bolshevik. Ponder a few of Sands' statements about Reed:"He can be handled and controlled much better by other means thanthrough the police"; and, "Can we not use him, instead of embittering himand making him an enemy? . . . he is, unless I am very much mistaken,susceptible to discreet guidance and might be quite useful." Quite obviously,the American International Corporation viewed J ohn Reed as an agent or apotential agent who could be, and probably had already been, broughtunder its control. The fact that Sands was in a position to request editing amemorandum by Reed (for Bullitt) suggests some degree of control had

already been established.

Then note Sands' potentially hostile attitude towards — and barely veiledintent to provoke — the Bolsheviks: "I believe it to be wise not to offend theBolshevik leaders unless and until it may become necessary to do so — if itshould become necessary . . ." (italics added).

This is an extraordinary letter in behalf of a Soviet agent from a private U.S.

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citizen whose counsel the State Department had sought, and continued toseek.

A later memorandum, March 19, 1920, in the State files reported the arrest of J ohn Reed by the Finnish authorities at Abo, and Reed's possession of English,

American and German passports. Reed, traveling under the alias of Casgormlich, carried diamonds, a large sum of money, Soviet propagandaliterature, and film. On April 21, 1920, the American legation at Helsingforscabled the State Department:

Am forwarding by the next pouch certified copies of letters from EmmaGoldman, Trotsky, Lenin and Sirola found in Reed's possession. Foreign Officehas promised to furnish complete record of the Court proceedings.

Once again Sands intervened: "I knew Mr. Reed personally."21 And, as in 1915,Metropolitan magazine also came to Reed's aid. H. J . Whigham wrote onApril 15, 1920, to Bainbridge Colby in the State Department: "Have heard

J ohn Reed in danger of being executed in Finland. Hope the State Dept. cantake immediate steps to see that he gets proper trial. Urgently requestprompt action."22 This was in addition to an April 13, 1920 telegram from HarryHopkins, who was destined for fame under President Roosevelt:

Understand State Dept. has information J ack Reed arrested Finland, will beexecuted. As one of his friends and yours and on his wife's behalf urge youtake prompt action prevent execution and secure release. Feel sure can relyyour immediate and effective intervention.23

J ohn Reed was subsequently released by the Finnish authorities.

This paradoxical account on intervention in behalf of a Soviet agent canhave several explanations. One hypothesis that fits other evidenceconcerning Wall Street and the Bolshevik Revolution is that J ohn Reed was ineffect an agent of the Morgan interests — perhaps only half aware of hisdouble role — that his anticapitalist writing maintained the valuable myththat all capitalists are in perpetual warfare with all soc ialist revolutionaries.Carroll Quigley, as we have already noted, reported that the Morganinterests financially supported domestic revolutionary organizations andanticapitalist writings.24 And we have presented in this chapter irrefutabledocumentary evidence that the Morgan interests were also effecting control

of a Soviet agent, interceding on his behalf and, more important, generallyintervening in behalf of Soviet interests with the U.S. government. Theseactivities centered at a single address: 120 Broadway, New York City.

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Footnotes:

1By a quirk the papers of incorporation for the Equitable Office Building were

drawn up by Dwight W. Morrow, later a Morgan partner, but then a memberof the law firm of Simpson, Thacher & Bartlett. The Thacher firm contributed

two members to the 1917 American Red Cross Mission to Russia (see chapterfive).

3Carroll Quigley, Tragedy and Hope (New York: Macmillan, 1966), p. 938.

Quigley was writing in 1965, so this places the start of the infiltration at about1915, a date consistent with the evidence here presented.

4Frank A. Vanderlip, From Farm Boy to Financier (New York: A. Appleton-

Century, 1935).

5

Ibid., p. 267.6Ibid., pp. 268-69. It should be noted that several names mentioned by

Vanderlip turn up elsewhere in this book: Rockefeller, Armour, Guaranty Trust,and (Otto) Kahn all had some connection more or less with the BolshevikRevolution and its aftermath.

7Ibid., p. 269.

8U.S. Stale Dept. Decimal File, 861.00/961.

9Sands memorandum to Lansing, p. 9.

10William Franklin Sands wrote several books, including Undiplomatic Memoirs

(New York: McGraw-Hill, 1930), a biography covering the years to 1904. Laterhe wrote Our .Jungle Diplomacy (Chapel Hill: University of North CarolinaPress, 1941), an unremarkable treatise on imperialism in Latin America. Thelatter work is notable only for a minor point on page 102: the willingness toblame a particularly unsavory imperialistic adventure on Adolf Stahl, a New York banker, while pointing oust quite unnecessarily that Stahl was of "German-J ewish origin." In August 1918 he published an article, "Salvaging

Russia," in Asia, to explain support of the Bolshevik regime.

11All the above in U.S. State Dept. Dec imal File, 861.00/969.

12 The author cannot forbear comparing the treatment of academic

researchers. In 1973, for example, the writer was still denied access to someState Department filesdated 1919.

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14U.S. State Dept. Decimal File, 861.516 84, September 2, 1919.

15

Ibid.16

Other contributors to the Masses mentioned in this book were journalistRobert Minor, chairman of the, U.S. Public Info, marion Committee; GeorgeCreel; Carl Sandburg, poet-historian; and Boardman Robinson, an artist.

17Granville Hicks, J ohn Reed, 1887-1920 (New York: Macmillan, 1936), p. 215.

18U.S. State Dept. Decimal File, 860d.1121 R 25/4.

19Ibid., 360d.1121/R25/18. According to G ranville Hicks in J ohn Reed, "Masses

could not pay his [Reed's] expenses. Finally, friends of the magazine, notablyEugene Boissevain, raised the money" (p. 249).

20U.S. State Dept. Dec imal File, 360. D. II21.R/20/221/2, /R25 (J ohn Reed). The

letter was transferred by Mr. Polk to the State Department archives on May 2,1935. All italics added.

21Ibid., 360d.1121 R 25/72.

22Ibid.

23 This was addressed to Bainbridge Colby, ibid., 360d.1121 R 25/30. Another

letter, dated April 14, 1920, and addressed to the secretary of state from 100Broadway, New York, was from W. Bourke Cochrane; it also pleaded for therelease of J ohn Reed.

24Quigley, op. cit.

*The J ohn MacGregor Grant Co., agent for the Russo-Asiatic Bank (involvedin financing the Bolsheviks), was at 120 Broadway — and financed byGuaranty Trust Company.

**Sir Ernest Cassel, prominent British financier.

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Chapter IX

GUARANTY TRUST GOES TO RUSSIA

Soviet Govemment desire Guarantee [sic] Trust Company to become fiscalagent in United States for all Soviet operations and contemplates Americanpurchase Eestibank with a view to complete linking of Soviet fortunes withAmerican financial interests.

William H. Coombs, reporting to the U.S. embassy in London, J une 1, 1920 (U.S.

State Dept. Dec imal File, 861.51/752). ("Eestibank" was an Estonian bank)

In 1918 the Soviets faced a bewildering array of internal and externalproblems. They occupied a mere fraction of Russia. To subdue the remainder,

they needed foreign arms, imported food, outside financial support,diplomatic recognition, and — above all — foreign trade. To gain diplomaticrecognition and foreign trade, the Soviets first needed representationabroad, and representation in turn required financing through gold or foreigncurrencies. As we have already seen, the first step was to establish the SovietBureau in New York under Ludwig Martens. At the same time, efforts weremade to transfer funds to the United States and Europe for purchases of needed goods. Then influence was exerted in the U.S. to gain recognition orto obtain the export licenses needed to ship goods to Russia.

New York bankers and lawyers provided significant — in some cases, critical

— assistance for each of these tasks. When Professor George V. Lomonossoff,the Russian technical expert in the Soviet Bureau, needed to transfer fundsfrom the chief Soviet agent in Scandinavia, a prominant Wall Street attorneycame to his assistance — using official State Department channels and theacting secretary of state as an intermediary. When gold had to betransferred to the United States, it was American International Corporation,Kuhn, Loeb & Co., and Guaranty Trust that requested the facilities and usedtheir influence in Washington to smooth the way. And when it came torecognition, we find American firms pleading .with Congress and with thepublic to endorse the Soviet regime.

Lest the reader should deduce — too hastily — from these assertions that WallStreet was indeed tinged with Red, or that Red flags were flying in the street(see frontispiece), we also in a later chapter present evidence that the J .P.Morgan firm financed Admiral Kolchak in Siberia. Aleksandr Kolchak wasfighting the Bolsheviks, to install his own brand of authoritarian rule. The firmalso contributed to the anti-Communist United Americans organization.

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WALL STREET COMES TO THE AID OF PROFESSOR LOMONOSSOFF

The case of Professor Lomonossoff is a detailed case history of Wall Streetassistance to the early Soviet regime. In late 1918 George V. Lomonossoff,member of the Soviet Bureau in New York and later first Soviet commissar of

railroads, found himself stranded in the United States without funds. At thistime Bolshevik funds were denied entry into the United States; indeed, therewas no official recognition of the regime at all. Lomonossoff was the subjectof a letter of October 24, 1918, from the U.S. Department of J ustice to theDepartment of State.1 The letter referred to Lomonossoff's Bolshevik attributesand pro-Bolshevik speeches. The investigator concluded, "Prof. Lomonossoff isnot a Bolshevik although his speeches constitute unequivocal support for theBolshevik cause." Yet Lomonossoff was able to pull strings at the highest levelsof the administration to have $25,000 transferred from the Soviet Unionthrough a Soviet espionage agent in Scandinavia (who was himself later tobecome confidential assistant to Reeve Schley, a vice president of ChaseBank). All this with the assistance of a member of a prominent Wall Street firmof attorneys!2

The evidence is presented in detail because the details themselves point upthe close relationship between certain interests that up to now have beenthought of as bitter enemies. The first indication of Lornonossoff's problem is aletter dated J anuary 7, 1919, from Thomas L. Chadbourne of Chadbourne,Babbitt 8e Wall of 14 Wall Street (same Address as William Boyce Thompson's)to Frank Polk, acting sec retary of state. Note the friendly salutation andcasual reference to Michael Gruzenberg, alias Alexander Gumberg, chief

Soviet agent in Scandinavia and later Lomonossoff's assistant:Dear Frank: You were kind enough to say that if I could inform you of thestatus of the $25,000 item of personal funds belonging to Mr. & Mrs.Lomonossoff you would set in motion the machinery necessary to obtain ithere for them.

I have communicated with Mr. Lomonossoff with respec t to it, and he tells methat Mr. Michael Gruzenberg, who went to Russia for Mr. Lomonossoff prior tothe difficulties between Ambassador Bakhmeteff and Mr. Lomonossoff,transmitted the information to him respecting this money through threeRussians who recently arrived from Sweden, and Mr. Lomonossoff believesthat the money is held at the Russian embassy in Stockholm, MilmskilnadGaten 37. If inquiry from the State Department should develop this to be notthe place where the money is on deposit, then the Russian embassy inStockholm can give the exact address of Mr. Gruzenberg, who can give theproper information respecting it. Mr. Lomonossoff does not receive lettersfrom Mr. Gruzenberg, although he is informed that they have been written:nor have any of his letters to Mr. Gruzenberg been delivered, he is also

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informed. For this reason it is impossible to be more definite than I have been,but I hope something can be done to relieve his and his wife'sembarrassment for lack of funds, and it only needs a little help to secure thismoney which belongs to them to aid them on this side of the water.

Thanking you in advance for anything you can do, I beg to remain, as ever,

Yours sincerely, Thomas L. Chadbourne.

In 1919, at the time this letter was written, Chadbourne was a dollar-a-yearman in Washington, counsel and director of the U.S. War Trade Board, and adirector of the U.S. Russian Bureau Inc., an official front company of the U.S.government. Previously, in 1915, Chadbourne organized Midvale Steel andOrdnance to take advantage of war business. In 1916 he became chairmanof the Democratic Finance Committee and later a director of WrightAeronautical and o[ Mack Trucks.

The reason Lomonossoff was not receiving letters from Gruzenberg is that theywere, in all probability, being intercepted by one of several governmentstaking a keen interest in the latter's activities.

On J anuary 11, 1919, Frank Polk cabled the American legation in Stockholm:

Department is in receipt of information that $25,000, personal funds of ....Kindly inquire of the Russian Legation informally and personally if such fundsare held thus. Ascertain, if not, address of Mr. Michael Gruzenberg, reportedto be in possession of information on this subject. Department not concernedofficially, merely undertaking inquiries on behalf of a former Russian official in

this country.Polk, Acting

Polk appears in this letter to be unaware of Lomonossoff's Bolshevikconnections, and refers to him as "a former Russian official in this country." Bethat as it may, within three days Polk received a reply from Morris at the U.S.Legation in Stockholm:

J anuary 14, 3 p.m. 3492. Your J anuary 12, 3 p.m., No. 1443.

Sum of $25,000 of former president of Russian commission of ways of communication in United States not known to Russian legation; neither can

address of Mr. Michael Gruzenberg be obtained.

Morris

Apparently Frank Polk then wrote to Chadbourne (the letter is not included inthe source) and indicated that State could find neither Lomonossoff norMichael Gruzenberg. C hadbourne replied on J anuary 21, 1919:

Dear Frank: Many thanks for your letter of J anuary 17. I understand that there

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are two Russian legations in Sweden, one being the soviet and the other theKerensky, and I presume your inquiry was directed to the soviet legation asthat was the address I gave you in my letter, namely, Milmskilnad Gaten 37,Stockholm.Michael Gruzenberg's address is, Holmenkollen Sanitarium, Christiania,

Norway, and I think the soviet legation could find out all about the fundsthrough Gruzenberg if they will communicate with him.

Thanking you for taking this trouble and assuring you of my deepapprec iation, I remain,

Sincerely yours, Thomas L. Chadbourne

We should note that a Wall Street lawyer had the address of Gruzenberg,chief Bolshevik agent in Scandinavia, at a time when the acting secretary of state and the U.S. Stockholm legation had no record of the address; norcould the legation track it down. Chadbourne also presumed that the Soviets

were the official government of Russia, although that government was notrecognized by the United States, and Chadbourne's official governmentposition on the War Trade Board would require him to know that.

Frank Polk then cabled the American legation at Christiania, Norway, withthe address of Michael Gruzenberg. It is not known whether Polk knew he waspassing on the address of an espionage agent, but his message was asfollows:

To American Legation, Christiania. J anuary 25, 1919. It is reported thatMichael Gruzenberg is at Holmenkollen Sanitarium. Is it possible for you to

locate him and inquire if he has any knowledge respecting disposition of $25,000 fund belonging to former president of Russian mission of ways of communication in the United States, Professor Lomonossoff.

Polk, Acting

The U.S. representative (Schmedeman) at Christiania knew Gruzenberg well.Indeed, the name had figured in reports from Schmedeman to Washingtonconcerning Gruzenberg's pro-Soviet activities in Norway. Schmedemanreplied:

J anuary 29, 8 p.m. 1543. Important. Your J anuary 25, telegram No. 650.

Before departing to-day for Russia, Michael Gruzenberg informed our navalattache that when in Russia some few months ago he had received, atLomonossoff's request, $25,000 from the Russian Railway ExperimentalInstitute, of which Prof. Lomonossoff was president. Gruzenberg claims thatto-day he cabled attorney for Lomonossoff in New York, Morris Hillquitt [sic],

that he, Gruzenberg, is in possession of the money, and before forwarding it isawaiting further instructions from the United States, requesting in the

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cablegram that Lomonossoff be furnished with living expenses for himself andfamily by Hillquitt pending the receipt of the money.3

As Minister Morris was traveling to Stockholm on the same train asGruzenberg, the latter stated that he would advise further with Morris in

reference to this subject.Schmedeman

The U.S. minister traveled with Gruzenberg to Stockholm where he receivedthe following cable from Polk:

It is reported by legation at Christiania that Michael Gruzenberg, has for Prof.G. Lomonossoff, the . . . sum of $25,000, received from Russian RailwayExperimental Institute. If you can do so without being involved with Bolshevikauthorities, department will be glad for you to facilitate transfer of this moneyto Prof. Lomonossoff in this country. Kindly reply.

Polk, Acting This cable produced results, for on February 5, 1919, Frank Polk wrote toChadbourne about a "dangerous bolshevik agitator," Gruzenberg:

My Dear Tom: I have a telegram from Christiania indicating that MichaelGruzenberg has the $25,000 of Prof. Lomonossoff, and received it from theRussian Railway Experimental Institute, and that he had cabled Morris Hillquitt[sic], at New York, to furnish Prof. Lomonossoff money for living expenses untilthe fund in question can be transmitted to him. As Gruzenberg has just beendeported from Norway as a dangerous bolshevik agitator, he may have haddifficulties in telegraphing from that country. I understand he has now gone

to Christiania, and while it is somewhat out of the department's line of action,I shall be glad, if you wish, to see if I can have Mr. Gruzenberg remit themoney to Prof. Lomonossoff from Stockholm, and am telegraphing ourminister there to find out if that can be done.

Very sincerely, yours, Frank L. Polk

The telegram from Christiania referred to in Polk's letter reads as follows:

February 3, 6 p.m., 3580. Important. Referring department's january 12, No.1443, $10,000 has now been deposited in Stockholm to my order to beforwarded to Prof. Lomonossoff by Michael Gruzenberg, one of the former

representatives of the bolsheviks in Norway. I informed him before acceptingthis money that I would communicate with you and inquire if it is your wishthat this money be forwarded to Lomonossoff. Therefore I request instructionsas to my course of action.

Morris

Subsequently Morris, in Stockholm, requested disposal instructions for a$10,000 draft deposited in a Stockholm bank. His phrase "[this] has been my

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only connection with the affair" suggests that Morris was aware that theSoviets could, and probably would, claim this as an officially expeditedmonetary transfer, since this action implied approval by the U.S. of suchmonetary transfers. Up to this time the Soviets had been required to smugglemoney into the U.S.

Four p.m. February 12, 3610, Routine.

With reference to my February 3, 6 p.m., No. 3580, and your February 8, 7p.m., No. 1501. It is not clear to me whether it is your wish for me to transferthrough you the $10,000 referred to Prof. Lomonossoff. Being advised byGruzenberg that he had deposited this money to the order of Lomonossoff ina Stockholm bank and has advised the bank that this draft could be sent toAmerica through me, provided I so ordered, has been my only connectionwith the affair. Kindly wire instructions.

Morris

Then follows a series of letters on the transfer of the $10,000 from A/B NordiskResebureau to Thomas L. Chadbourne at 520 Park Avenue, New York City,through the medium of the State Department. The first letter containsinstructions from Polk, on the mechanics of the transfer; the second, fromMorris to Polk, contains $10,000; the third, from Morris to A/B NordiskResebureau, requesting a draft; the fourth is a reply from the bank with acheck; and the fifth is the acknowledgment.

Your February 12, 4 p.m., No. 3610.

Money may be transmitted direct to Thomas L. Chadbourne, 520 Park

Avenue, New York City,

Polk, Acting

* * * * *

Dispatch, No. 1600, March 6, 1919:

The Honorable the Secretary of State, Washington

Sir: Referring to my telegram, No. 3610 of February 12, and to thedepartment's reply, No. 1524 of February 19 in regard to the sum of $10,000for Professor Lomonossoff, I have the honor herewith to inclose a copy of a

letter which I addressed on February 25 to A. B. Nordisk Resebureau, thebankers with whom this money was deposited; a copy of the reply of A. B.Nordisk Resebureau, dated February 26; and a copy of my letter to the A. B.Nordisk Resebureau, dated February 27.

It will be seen from this correspondence that the bank was desirous of havingthis money forwarded to Professor Lomonossoff. I explained to them,however, as will be seen from my letter of February 27, that I had received

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authorization to forward it direc tly to Mr. Thomas L. Chadbourne, 520 ParkAvenue, New York City. I also inclose herewith an envelope addressed to Mr.Chadbourne, in which are inclosed a letter to him, together with a check onthe National City Bank of New York for $10,000.

I have the honor to be, sir, Your obedient servant, Ira N. Morris

* * * * *

A. B. Nordisk Reserbureau,

No. 4 Vestra Tradgardsgatan, Stockholm.

Gentlemen: Upon receipt of your letter of J anuary 30, stating that you hadreceived $10,000 to be paid out to Prof. G. V. Lomonossoff, upon my request,I immediately telegraphed to my Government asking whether they wishedthis money forwarded to Prof. Lomonossoff. I am to-day in receipt of a replyauthorizing me to forward the money direc t to Mr. Thomas L. Chadbourne,

payable to Prof. Lomonossoff. I shall be glad to forward it as instructed by myGovernment.

I am, gentlemen,

Very truly, yours, Ira N. Morris

* * * * *

Mr. I. N. Morris,

American Minister, Stockholm

Deal Sir: We beg to acknowledge the receipt of your favor of yesterdayregarding payment of dollars 10,000 — to Professor G. V. Lomonossoff, andwe hereby have the pleasure to inclose a check for said amount to the orderof Professor G. V. Lomonossoff, which we understand that you are kindlyforwarding to this gentleman. We shall be glad to have your receipt for same,arid beg to remain,

Yours, respectfully, A. B. Nordisk Reserbureau E. Molin

* * * * *

A. B. Nordisk Resebureau.

Stockholm

Gentlemen: I beg to acknowledge receipt of your letter of February 26,inclosing a check for $10,000 payable to Professor G. V. Lomonossoff. As Iadvised you in my letter of February 25, I have been authorized to forwardthis check to Mr. Thomas L. Chadbourne, 520 Park Avenue, New York City,and I shall forward it to this gentleman within the next few days, unless youindicate a wish to the contrary.

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Very truly, yours, Ira N. Morris

Then follow an internal State Department memorandum and Chadbourne'sacknowledgment:

Mr. Phillips to Mr. Chadbourne, April 3, 1919.

Sir: Referring to previous correspondence regarding a remittance of tenthousand dollars from A. B. Norsdisk Resebureau to Professor G. V.Lomonossoff, which you requested to be transmitted through the AmericanLegation at Stockholm, the department informs you that it is in receipt of adispatch from the American minister at Stockholm dated March 6, 1919,covering the enclosed letter addressed to you, together with a check for theamount referred to, drawn to the order to Professor Lomonossoff.

I am, sir, your obedient servant William Phillips, Acting Sec retary of State.

Inclosure: Sealed letter addressed Mr. Thomas L. Chadbourne, inclosed with

1,600 from Sweden.* * * * *

Reply of Mr. Chadbourne, April 5, 1919.

Sir: I beg to acknowledge receipt of your letter of April 3, enclosing letteraddressed to me, containing check for $10,000 drawn to the order of Professor Lomonossoff, which check I have to-day delivered.

I beg to remain, with great respect, Very truly, yours, Thomas L. Chadbourne

Subsequently the Stockholm legation enquired concerning Lomonossoff's

address in the U.S. and was informed by the State Department that "as far asthe department is aware Professor George V. Lomonossoff can be reachedin care of Mr. Thomas L. Chadbourne, 520 Park Avenue, New York City."

It is evident that the State Department, for the reason either of personalfriendship between Polk and Chadbourne or of political influence, felt it hadto go along and act as bagman for a Bolshevik agent — just ejected fromNorway. But why would a prestigious establishment law firm be so intimatelyinterested in the health and welfare of a Bolshevik emissary? Perhaps acontemporary State Department report gives the clue:

Martens, the Bolshevik representative, and Professor Lomonossoff are bankingon the fact that Bullitt and his party will make a favorable report to theMission and the President regarding conditions in Soviet Russia and that onthe basis of this report the Government of the United States will favor dealingwith the Soviet Government as, proposed by Martens. March 29, 1919.4

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THE STAGE IS SET FOR COMMERCIAL EXPLOITATION OF RUSSIA

It was commercial exploitation of Russia that excited Wall Street, and WallStreet had lost no time in preparing its program. On May 1, 1918 — anauspicious date for Red revolutionaries — the American League to Aid and

Cooperate with Russia was established, and its program approved in aconference held in the Senate Office Building, Washington, D.C. The officersand executive committee of the league represented some superficiallydissimilar factions. Its president was Dr. Frank J . Goodnow, president of J ohnsHopkins University. Vice presidents were the ever active William Boyce Thompson, Oscar S. Straus, J ames Duncan, and Frederick C. Howe, whowrote Confessions of a Monopolist, the rule book by which monopolists couldcontrol society. The Treasurer was George P. Whalen, vice president of Vacuum Oil Company. Congress was represented by Senator William EdgarBorah and Senator John Sharp Williams, of the Senate Foreign RelationsCommittee; Senator William N. Calder; and Senator Robert L. Owen,chairman of the Banking and Currency Committee. House members wereHenry R. Cooper and Henry D. Flood, chairman of the House Foreign AffairsCommittee. American business was represented by Henry Ford; Charles A.Coffin, chairman of the board of General Electric Company; and M. A.Oudin, then foreign manager of General Electric. George P. Whalenrepresented Vacuum Oil Company, and Daniel Willard was president of theBaltimore & Ohio Railroad. The more overtly revolutionary element wasrepresented by Mrs. Raymond Robins, whose name was later found to beprominent in the Soviet Bureau files and in the Lusk Committee hearings;Henry L. Slobodin, described as a "prominent patriotic socialist"; and Lincoln

Steffens, a domestic Communist of note.

In other words, this was a hybrid executive committee; it representeddomestic revolutionary elements, the Congress of the United States, andfinancial interests prominently involved with Russian affairs.

Approved by the executive committee was a program that emphasized theestablishment of an official Russian division in the U.S. government "directedby strong men." This division would enlist the aid of universities, scientificorganizations, and other institutions to study the "Russian question," wouldcoordinate and unite organizations within the United States "for the

safeguarding of Russia," would arrange for a "special intelligence committeefor the investigation of the Russian matter," and, generally, would itself studyand investigate what was deemed to be the "Russian question." Theexecutive committee then passed a resolution supporting PresidentWoodrow Wilson's message to the Soviet congress in Moscow and the leagueaffirmed its own support for the new Soviet Russia.

A few weeks later, on May 20, 1918, Frank J . Goodnow and Herbert A.

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Carpenter, representing the league, called upon Assistant Secretary of StateWilliam Phillips and impressed upon him the necessity for establishing an"official Russian Division of the Government to coordinate all Russian matters. They asked me [wrote Phillips] whether they should take this matter up withthe President."5

Phillips reported this direc tly to the sec retary of state and on the next daywrote Charles R. Crane in New York City requesting his views on the AmericanLeague to Aid and C ooperate with Russia. Phillips besought Crane, "I reallywant your advice as to how we should treat the league .... We do not wantto stir up trouble by refusing to cooperate with them. On the other hand it is aqueer committee and I don't quite 'get it.'"6

In early J une there arrived at the State Department a letter from WilliamFranklin Sands of American International Corporation for Sec retary of StateRobert Lansing. Sands proposed that the United States appoint an

administrator in Russia rather than a commission, and opined that "thesuggestion of an allied military force in Russia at the present moment seemsto me to be a very dangerous one."7 Sands emphasized the possibility of trade with Russia and that this possibility could be advanced "by a wellchosen administrator enjoying the full confidence of the government"; heindicated that "Mr. Hoover" might fit the role.8 The letter was passed to Phillipsby Basil Miles, a former associate of Sands, with the expression, "I think theSecretary would find it worthwhile to look through."

In early J une the War Trade Board, subordinate to the State Department,passed a resolution, and a committee of the board comprising Thomas L.Chadbourne (Professor Lomonossoff's contact), Clarence M. Woolley, and J ohn Foster Dulles submitted a memorandum to the Department of State,urging consideration of ways and means "to bring about closer and morefriendly commercial relations between the United States and Russia." Theboard recommended a mission to Russia and reopened the questionwhether this should result from an invitation from the Soviet government.

Then on J une 10, M. A. Oudin, foreign manager of General ElectricCompany, expressed his views on Russia and clearly favored a "constructiveplan for the economic assistance" of Russia.9 In August 1918 Cyrus M.

McCormick of International Harvester wrote to Basil Miles at the StateDepartment and praised the President's program for Russia, whichMcCormick thought would be "a golden opportunity."10

Consequently, we find in mid-1918 a concerted effort by a segment of American business — obviously prepared to open up trade — to takeadvantage of its own preferred position regarding the Soviets.

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GERMANY AND THE UNITED STATES STRUGGLE FOR RUSSIAN BUSINESS

In 1918 such assistance to the embryonic Bolshevik regime was justified on thegrounds of defeating Germany and inhibiting German exploitation of Russia. This was the argument used by W. B. Thompson and Raymond Robins in

sending Bolshevik revolutionaries and propaganda teams into Germany in1918. The argument was also employed by Thompson in 1917 whenconferring with Prime Minister Lloyd George about obtaining British support forthe emerging Bolshevik regime. In June 1918 Ambassador Francis and his staff returned from Russia and urged President Wilson "to recognize and aid theSoviet government of Russia."11 These reports made by the embassy staff tothe State Department were leaked to the press and widely printed. Aboveall, it was claimed that delay in recognizing the Soviet Union would aidGermany "and helps the German plan to foster reaction and counter-revolution."12 Exaggerated statistics were cited to support the proposal — forexample, that the Soviet government represented ninety percent of theRussian people "and the other ten percent is the former propertied andgoverning class .... Naturally they are displeased."13 A former American officialwas quoted as saying, "If we do nothing — that is, if we just let things drift —we help weaken the Russian Soviet Government. And that plays Germany'sgame."14 So, it was recommended that "a commission armed with credit andgood business advice could help much."

Meanwhile, inside Russia the economic situation had become critical andthe inevitability of an embrace with capitalism dawned on the CommunistParty and its planners. Lenin crystallized this awareness before the Tenth

Congress of the Russian Communist Party:Without the assistance of capital it will be impossible for us to retainproletarian power in an incredibly ruined country in which the peasantry, alsoruined, constitutes the overwhelming majority — and, of course, for thisassistance capital will squeeze hundreds per cent out of us. This is what wehave to understand. Hence, either this type of economic relations or nothing....15

Then Leon Trotsky was quoted as saying, "What we need here is an organizerlike Bernard M. Baruch."16

Soviet awareness of its impending economic doom suggests that Americanand German business was attracted by the opportunity of exploiting theRussian market for needed goods; the Germans, in fact, made an early startin 1918. The first deals made by the Soviet Bureau in New York indicate thatearlier American financial and moral support of the Bolsheviks was paying off in the form of contracts.

The largest order in 1919-20 was contracted to Morris & Co., Chicago

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meatpackers, for fifty million pounds of food products, valued atapproximately $10 million. The Morris meatpacking family was related to theSwift family. Helen Swift, later connected with the Abraham Lincoln Center"Unity," was married to Edward Morris (of the meatpacking firm) and was alsothe brother of Harold H. Swift, a "major" in the 1917 Thompson Red Cross

Mission to Russia.

Table: CONTRACTS MADE IN 1919 BY THE SOVIET BUREAU WITH U.S. FIRMS

Ludwig Martens was formerly vice president of Weinberg & Posner, located at120 Broadway, New York City, and this firm was given a $3 million order.

SOVIET GOLD AND AMERICAN BANKS

Gold was the only practical means by which the Soviet Union could pay forits foreign purchases and the international bankers were quite willing tofacilitate Soviet gold shipments. Russian gold exports, primarily imperial goldcoins, started in early 1920, to Norway and Sweden. These were transshippedto Holland and Germany for other world destinations, including the UnitedStates.

In August 1920, a shipment of Russian gold coins was received at the DenNorske Handelsbank in Norway as a guarantee for payment of 3,000 tons of coal by Niels J uul and Company in the U.S. in behalf of the Sovietgovernment. These coins were transferred to the Norges Bank forsafekeeping. The coins were examined and weighed, were found to havebeen minted before the outbreak of war in 1914, and were therefore genuineimperial Russian coins.17

Shortly after this initial episode, the Robert Dollar Company of San Franciscoreceived gold bars, valued at thirty-nine million Swedish kroner, in itsStockholm account; the gold "bore the stamp of the old Czar Government of Russia." The Dollar Company agent in Stockholm applied to the AmericanExpress Company for facilities to ship the gold to the United States. American

Express refused to handle the shipment. Robert Dollar, it should be noted, wasa direc tor of American International Company; thus AIC was linked to the firstattempt at shipping gold direct to America.18

Simultaneously it was reported that three ships had left Reval on the BalticSea with Soviet gold destined for the U.S. The S.S. Gauthod loaded 216 boxesof gold under the supervision of Professor Lomonossoff — now returning to theUnited States. The S.S. Carl Line loaded 216 boxes of gold under the

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http://reformed-theology.org/html/books/bolshevik_revolution/contracts.htm

http://reformed-theology.org/html/books/bolshevik_revolution/contracts.htm



supervision of three Russian agents. The S.S. Ruheleva was laden with 108boxes of gold. Each box contained three poods of gold valued at sixtythousand gold rubles each. This was followed by a shipment on the S.S.Wheeling Mold.

Kuhn, Loeb & Company, apparently acting in behalf of Guaranty TrustCompany, then inquired of the State Department concerning the officialattitude towards the receipt of Soviet gold. In a report the departmentexpressed concern because if acceptance was refused, then "the gold[would] probably come back on the hands of the War Department, causingthereby direc t governmental responsibility and increased embarrassment."19 The report, written by Merle Smith in conference with Kelley and Gilbert,argues that unless the possessor has definite knowledge as to imperfect title,it would be impossible to refuse acceptance. It was anticipated that the U.S.would be requested to melt the gold in the assay office, and it wasthereupon decided to telegraph Kuhn, Loeb & Company that no restrictionswould be imposed on the importation of Soviet gold into the United States.

The gold arrived at the New York Assay Office and was deposited not byKuhn, Loeb & Company — but by Guaranty Trust Company of New York City.Guaranty Trust then inquired of the Federal Reserve Board, which in turninquired of the U.S. Treasury, concerning acceptance and payment. Thesuperintendent of the New York Assay Office informed the Treasury that theapproximately seven million dollars of gold had no identifying marks and that"the bars deposited have already been melted in United States mint bars." The Treasury suggested that the Federal Reserve Board determine whether

Guaranty Trust Company had acted "for its own account, or the account of another in presenting the gold," and particularly "whether or not any transferof credit or exchange transaction has resulted from the importation ordeposit of the gold."20

On November 10, 1920, A. Breton, a vice president of the Guaranty Trust,wrote to Assistant Sec retary Gilbert of the Treasury Department complainingthat Guaranty had not received from the assay office the usual immediateadvance against deposits of "yellow metal left with them for reduction." Theletter states that Guaranty Trust had received satisfactory assurances that thebars were the product of melting French and Belgium coins, although it had

purchased the metal in Holland. The letter requested that the Treasuryexpedite payment for the gold. In reply the Treasury argued that it "does notpurchase gold tendered to the United States mint or assay offices which isknown or suspected to be of Soviet origin," and in view of known Soviet salesof gold in Holland, the gold submitted by Guaranty Trust Company was heldto be a "doubtful case, with suggestions of Soviet origin." It suggested that theGuaranty Trust Company could withdraw the gold from the assay office at

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any time it wished or could "present such further evidence to the Treasury, theFederal Reserve Bank of New York or the Department of State as may benecessary to clear the gold of any suspicion of Soviet origin."21

There is no file record concerning final disposition of this case but presumably

the Guaranty Trust Company was paid for the shipment. Obviously this golddeposit was to implement the mid-1920 fiscal agreement between Guaranty Trust and the Soviet government under which the company became theSoviet agent in the United States (see epigraph to this chapter).

It was determined at a later date that Soviet gold was also being sent to theSwedish mint. The Swedish mint "melts Russian gold, assays it and affixes theSwedish mint stamp at the request of Swedish banks or other Swedish subjectsowing the gold."22 And at the same time Olof Aschberg, head of SvenskaEkonomie A/B (the Soviet intermediary and affiliate of Guaranty Trust), wasoffering "unlimited quantities of Russian gold" through Swedish banks.23

In brief, we can tie American International Corporation, the influentialProfessor Lomonossoff, Guaranty Trust, and Olof Aschberg (whom we'vepreviously identified) to the first attempts to import Soviet gold into the UnitedStates.

MAX MAY OF GUARANTY TRUST BECOMES DIRECTOR OF RUSKOMBANK

Guaranty Trust's interest in Soviet Russia was renewed in 1920 in the form of aletter from Henry C. Emery, assistant manager of the Foreign Department of Guaranty Trust, to De Witt C. Poole in the State Department. The letter wasdated J anuary 21, 1920, just a few weeks before Allen Walker, the managerof the Foreign Department, became active in forming the virulent anti-Sovietorganization United Americans (see page 165). Emery posed numerousquestions about the legal basis of the Soviet government and banking inRussia and inquired whether the Soviet government was the de factogovernment in Russia.24 "Revolt before 1922 planned by Reds," claimedUnited Americans in 1920, but Guaranty Trust had started negotiations withthese same Reds and was acting as the Soviet agent in the U.S. in mid-1920.

In January 1922 Secretary of Commerce Herbert Hoover, interceded with theState Department in behalf of a Guaranty Trust scheme to set up exchangerelations with the "New State Bank at Moscow." This scheme, wrote HerbertHoover, "would not be objectionable if a stipulation were made that allmonies coming into their possession should be used for the purchase of civilian commodities in the United States"; and after asserting that suchrelations appeared to be in line with general policy, Hoover added, "It mightbe advantageous to have these transactions organized in such a manner

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that we know what the movement is instead of disintegrated operations nowcurrent."25 Of course, such "disintegrated operations" are consistent with theoperations of a free market, but this approach Herbert Hoover rejected infavor of channeling the exchange through specified and controllablesources in New York. Secretary of State Charles E. Hughes expressed dislike of

the Hoover-Guaranty Trust scheme, which he thought could be regarded asde facto recognition of the Soviets while the foreign credits acquired mightbe used to the disadvantage of the United States.26 A noncommittal replywas sent by State to Guaranty Trust. However, Guaranty went ahead (withHerbert Hoover's support),27 participated in formation of the first Sovietinternational bank, and Max May of Guaranty Trust became head of theforeign department of the new Ruskombank.28

Footnotes:


2 This section is from U.S., Senate, Russian Propaganda, hearings before asubcommittee of the Committee on Foreign Relations, 66th Cong., 2d sess.,1920.

3Morris Hillquit was the intermediary between New York banker Eugene

Boissevain and J ohn Reed in Petrograd.

4U.S. State Dept. Dec imal File, 861.00/4214a.

5Ibid., 861.00/1938.

6Ibid.

7Ibid., 861.00/2003.

8Ibid.

9Ibid., 861.00/2002.

10Ibid.

11Ibid., M 316-18-1306.

12Ibid.

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13Ibid.

14Ibid.

15

V. 1. Lenin, Report to the Tenth Congress of the Russian Communist Party,(Bolshevik), March 15, 1921.

16William Reswick, I Dreamt Revolution (Chicago: Henry Regnery, 1952), p. 78.


18Ibid., 861.51/836.

19Ibid., 861.51,/837, October 4, 1920.

20Ibid., 861.51/837, October 24, 1920.

21Ibid., 861.51/853, November 11, 1920.

22Ibid., 316-119, 1132.

23Ibid., 316-119-785. This report has more data on transfers of Russian gold

through other countries and intermediaries. See also 316-119-846.

24Ibid., 861.516/86.

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Chapter X

J.P. MORGAN GIVES A LITTLE HELP TO

THE OTHER SIDEI would not sit down to lunch with a Morgan — except possibly to learnsomething of his motives and attitudes.

William E. Dodd, Ambassador Dodd's Diary, 1933-1938

So far our story has revolved around a single major financial house —Guaranty Trust Company, the largest trust company in the United States andcontrolled by the J .P. Morgan firm. Guaranty Trust used Olof Aschberg, the

Bolshevik banker, as its intermediary in Russia before and after the revolution.Guaranty was a backer of Ludwig Martens and his Soviet Bureau, the firstSoviet representatives in the United States. And in mid-1920 Guaranty was theSoviet fiscal agent in the U.S.; the first shipments of Soviet gold to the UnitedStates also traced back to Guaranty Trust.

There is a startling reverse side to this pro-Bolshevik activity — Guaranty Trustwas a founder of United Americans, a virulent anti-Soviet organization whichnoisily threatened Red invasion by 1922, claimed that $20 million of Sovietfunds were on the way to fund Red revolution, and forecast panic in thestreets and mass starvation in New York City. This duplicity raises, of course,

serious questions about the intentions of Guaranty Trust and its directors.Dealing with the Soviets, even backing them, can be explained by apoliticalgreed or simply profit motive. On the other hand, spreading propagandadesigned to create fear and panic while at the same time encouraging theconditions that give rise to the fear and panic is a considerably more seriousproblem. It suggests utter moral depravity. Let's first look more c losely at theanti-Communist United Americans.

UNITED AMERICANS FORMED TO FIGHT COMMUNISM1

In 1920 the organization United Americans was founded. It was limited tocitizens of the United States and planned for five million members, "whosesole purpose would be to combat the teachings of the socialists, communists,I.W.W., Russian organizations and radical farmers societies."

In other words, United Americans was to fight all those institutions and groupsbelieved to be anticapitalist.

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The officer's of the preliminary organization established to build up UnitedAmericans were Allen Walker of the Guaranty Trust Company; Daniel Willard,president of the Baltimore 8c Ohio Railroad; H. H. Westinghouse, of Westinghouse Air Brake Company; and Otto H. Kahn, of Kuhn, Loeb 8cCompany and American International Corporation. These Wall Streeters were

backed up by assorted university presidents arid Newton W. Gilbert (formergovernor of the Philippines). Obviously, United Americans was, at first glance,exactly the kind of organization that establishment capitalists would beexpected to finance and join. Its formation should have brought no greatsurprise.

On the other hand, as we have already seen, these financiers were alsodeeply involved in supporting the new Soviet regime in Russia — although thissupport was behind the scenes, recorded only in government files, and not tobe made public for 50 years. As part of United Americans, Walker, Willard,Westinghouse, and Kahn were playing a double game. Otto H. Kahn, afounder of the anti-Communist organization, was reported by the Britishsoc ialist J . H. Thomas as having his "face towards the light." Kahn wrote thepreface to Thomas's book. In 1924 Otto Kahn addressed the League forIndustrial Democracy and professed common objectives with this activistsocialist group (see page 49). The Baltimore & Ohio Railroad (Willard'semployer) was active in the development of Russia during the 1920s.Westinghouse in 1920, the year United Americans was founded, wasoperating a plant in Russia that had been exempted from nationalization.And the role of Guaranty Trust has already been minutely described.

UNITED AMERICANS REVEALS "STARTLING DISCLOSURES" ON REDS

In March 1920 the New York Times headlined an extensive, detailed scarestory about Red invasion of the United States within two years, an invasionwhich was to be financed by $20 million of Soviet funds "obtained by themurder and robbery of the Russian nobility."2

United Americans had, it was revealed, made a survey of "radical activities"in the United States, and had done so in its role as an organization formed to"preserve the Constitution of the United States with the representative form of government and the right of individual possession which the Constitutionprovides."

Further, the survey, it was proclaimed, had the backing of the executiveboard, "including Otto H. Kahn, Allen Walker of the Guaranty Trust Company,Daniel Willard," and others. The survey asserted that

the radical leaders are confident of effecting a revolution within two years,

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that the start is to be made in New York City with a general strike, that Redleaders have predicted much bloodshed and that the Russian SovietGovernment has contributed $20,000,000 to the American radicalmovement.

The Soviet gold shipments to Guaranty Trust in mid-1920 (540 boxes of threepoods each) were worth roughly $15,000,000 (at $20 a troy ounce), and othergold shipments through Robert Dollar and Olof Aschberg brought the totalvery close to $20 million. The information about Soviet gold for the radicalmovement was called "thoroughly reliable" and was "being turned over tothe Government." The Reds, it was asserted, planned to starve New York intosubmission within four days:

Meanwhile the Reds count on a financial panic within the next few weeks tohelp their cause along. A panic would cause distress among the workingmenand thus render them more susceptible to revolution doc trine.

The United Americans' report grossly overstated the number of radicals in theUnited States, at first tossing around figures like two or five million and thensettling for precisely 3,465,000 members in four radical organizations. Thereport concluded by emphasizing the possibility of bloodshed and quoted"Skaczewski, President of the International Publishing Assoc iation, otherwisethe Communist Party, [who] boasted that.the time was coming soon whenthe Communists would destroy utterly the present form of society."

In brief, United Americans published a report without substantiatingevidence, designed to scare the man in the street into panic: The significantpoint of course is that this is the same group that was responsible for

protecting and subsidizing, indeed assisting, the Soviets so they couldundertake these same plans.

CONCLUSIONS CONCERNING UNITED AMERICANS

Is this a case of the right hand not knowing what the left hand was doing?Probably not. We are talking about heads of companies, eminentlysuccessful companies at that. So United Americans was probably a ruse todivert public — and official — attention from the subterranean efforts being

made to gain entry to the Russian market.

United Americans is the only documented example known to this writer of anorganization assisting the Soviet regime and also in the forefront of oppositionto the Soviets. This is by no means an inconsistent course of action, andfurther research should at least focus on the following aspects:

(a) Are there other examples of double-dealing by influential groupsgenerally known as the establishment?

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(b) Can these examples be extended into other areas? For example, is thereevidence that labor troubles have been instigated by these groups?

(c) What is the ultimate purpose of these pincer tactics? Can they be relatedto the Marxian axiom: thesis versus antithesis yields synthesis? It is a puzzle why

the Marxist movement would attack capitalism head-on if its objective was aCommunist world and if it truly accepted the dialectic. If the objective is aCommunist world — that is, if communism is the desired synthesis — andcapitalism is the thesis, then something apart from capitalism or communismhas to be antithesis. Could therefore capitalism be the thesis and communismthe antithesis, with the objective of the revolutionary groups and their backersbeing a synthesizing of these two systems into some world system yetundescribed?

MORGAN AND ROCKEFELLER AID KOLCHAK

Concurrently with these efforts to aid the Soviet Bureau and UnitedAmericans, the J .P. Morgan firm, which controlled Guaranty Trust, wasproviding financ ial assistance for one of the Bolshevik's primary opponents,Admiral Aleksandr Kolchak in Siberia. On J une 23, 1919, Congressman Masonintroduced House Resolution 132 instructing the State Department "to makeinquiry as to all and singular as to the truth of . . . press reports" charging thatRussian bondholders had used their influence to bring about the "retention of American troops in Russia" in order to ensure continued payment of intereston Russian bonds. According to a file memorandum by Basil Miles, an

associate of William F. Sands, Congressman Mason charged that certainbanks were attempting to secure recognition of Admiral Kolchak in Siberia toget payment on former Russian bonds.

Then in August 1919 the secretary of state, Robert Lansing, received from theRockefeller-influenced National City Bank of New York a letter requestingofficial comment on a proposed loan of $5 million to Admiral Kolchak; andfrom J .P. Morgan & Co. and other bankers another letter requesting the viewsof the department concerning an additional proposed £10 million sterlingloan to Kolchak by a consortium of British and American bankers.3

Sec retary Lansing informed the bankers that the U.S. had not recognizedKolchak and, although prepared to render him assistance, "the Departmentdid not feel it could assume the responsibility of encouraging suchnegotiations but that, nevertheless, there seemed to be no objection to theloan provided the bankers deemed it advisable to make it."4

Subsequently, on September 30, Lansing informed the American consulgeneral at Omsk that the "loan has since gone through in regular course"5

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Two fifths was taken up by British banks and three fifths by American banks. Two thirds of the total was to be spent in Britain and the United States and theremaining one third wherever the Kolchak Government wished. The loan wassecured by Russian gold (Kolchak's) that was shipped to San Francisco. Thetiming of the previously described Soviet exports of gold suggests that

cooperation with the Soviets on gold sales was determined on the heels of the Kolchak gold-loan agreement.

The Soviet gold sales and the Kolchak loan also suggest that Carroll Quigley'sstatement that Morgan interests infiltrated the domestic left applied also tooverseas revolutionary and counterrevolutionary movements. Summer 1919was a time of Soviet military reverses in the C rimea and the Ukraine and thisblack picture may have induced British and American bankers to mend theirfences with the anti-Bolshevik forces. The obvious rationale would be to havea foot in all camps, and so be in a favorable position to negotiate forconcessions and business after the revolution or counterrevolution hadsucceeded and a new government stabilized. As the outcome of anyconflict cannot be seen at the start, the idea is to place sizable bets on allthe horses in the revolutionary race. Thus assistance was given on the onehand to the Soviets and on the other to Kolchak — while the Britishgovernment was supporting Denikin in the Ukraine and the Frenchgovernment went to the aid of the Poles.

In autumn 1919 the Berlin newspaper Berliner Zeitung am Mittak (October 8and 9) accused the Morgan firm of financing the West Russian governmentand the Russian-German forces in the Baltic fighting the Bolsheviks — both

allied to Kolchak. The Morgan firm strenuously denied the charge: "This firmhas had no discussion, or meeting, with the West Russian Government or withanyone pretending to represent it, at any time."6 But if the financing chargewas inaccurate there is evidence of collaboration. Documents found byLatvian government intelligence among the papers of Colonel Bermondt,commander of the Western Volunteer Army, confirm "the relations claimedexisting between Kolchak's London Agent and the German industrial ringwhich was back of Bermondt."7

In other words, we know that J .P. Morgan, London, and New. York bankersfinanced Kolchak. There is also evidence that connects Kolchak and his army

with other anti-Bolshevik armies. And there seems to be little question thatGerman industrial and banking circles were financ ing the all-Russian anti-Bolshevik army in the Baltic. Obviously bankers' funds have no national flag.

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Footnotes:

1New York Times, June 21, 1919.

2Ibid., March 28, 1920.


4Ibid., 861.51/675

5Ibid., 861.51/656

6Ibid., 861.51/767 — a letter from J . P. Morgan to Department of State,

November 11, 1919. The financ ing itself was a hoax (see AP report in StateDepartment files following the Morgan letter).

7Ibid., 861.51/6172 and /6361.

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Chapter XI

THE ALLIANCE OF BANKERS AND

REVOLUTIONThe name Rockefeller does not connote a revolutionary, and my life situationhas fostered a careful and cautious attitude that verges on conservatism. Iam not given to errant causes...

J ohn D. Rockefeller III, The Second American Revolution (New York: Harper &

Row. 1973)

THE EVIDENCE PRESENTED: A SYNOPSIS

Evidence already published by George Katkov, Stefan Possony, and MichaelFutrell has established that the return to Russia of Lenin and his party of exiledBolsheviks, followed a few weeks later by a party of Mensheviks, wasfinanced and organized by the German government.1 The necessary fundswere transferred in part through the Nya Banken in Stockholm, owned byOlof Aschberg, and the dual German objectives were: (a) removal of Russiafrom the war, and (b) control of the postwar Russian market.2

We have now gone beyond this evidence to establish a continuing workingrelationship between Bolshevik banker Olof Aschberg and the Morgan-controlled Guaranty Trust Company in New York before, during, and after theRussian Revolution. In tsarist times Aschberg was the Morgan agent in Russiaand negotiator for Russian loans in the United States; during 1917 Aschbergwas financial intermediary for the revolutionaries; and after the revolutionAschberg became head of Ruskombank, the first Soviet international bank,while Max May, a vice president of the Morgan-controlled Guaranty Trust,became director and chief of the Ruskom-bank foreign department. Wehave presented documentary evidence of a continuing working relationshipbetween the Guaranty Trust Company and the Bolsheviks. The direc tors of

Guaranty Trust in 1917 are listed in Appendix 1.

Moreover, there is evidence of transfers of funds from Wall Street bankers tointernational revolutionary activities. For example, there is the statement(substantiated by a cablegram) by William Boyce Thompson — a director of the Federal Reserve Bank of New York, a large stockholder in the Rockefeller-controlled Chase Bank, and a financial associate of the Guggenheims andthe Morgans — that he (Thompson) contributed $1 million to the Bolshevik

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Revolution for propaganda purposes. Another example is J ohn Reed, theAmerican member of the Third International executive committee who wasfinanced and supported by Eugene Boissevain, a private New York banker,and who was employed by Harry Payne Whitney's Metropolitan magazine.Whitney was at that time a direc tor of Guaranty Trust. We also established

that Ludwig Martens, the first Soviet "ambassador" to the United States, was(according to British Intelligence chief Sir Basil Thompson) backed by fundsfrom Guaranty Trust Company. In tracing Trotsky's funding in the U.S. wearrived at German sources, yet to be identified, in New York. And though wedo not know the precise German sources of Trotsky's funds, we do know thatVon Pavenstedt, the chief German espionage paymaster in the U.S., was alsosenior partner of Amsinck & Co. Amsinck was owned by the ever-presentAmerican International Corporation — also controlled by the J .P. Morganfirm.

Further, Wall Street firms including Guaranty Trust were involved withCarranza's and Villa's wartime revolutionary ac tivities in Mexico. We alsoidentified documentary evidence concerning. a Wall Street syndicate'sfinanc ing of the 1912 Sun Yat-sen revolution in China, a revolution that istoday hailed by the Chinese Communists as the precursor of Mao's revolutionin China. Charles B. Hill, New York attorney negotiating with Sun Yat-sen inbehalf of this syndicate, was a direc tor of three Westinghouse subsidiaries,and we have found that Charles R. Crane of Westinghouse in Russia wasinvolved in the Russian Revolution.

Quite apart from finance, we identified other, and possibly more significant,

evidence of Wall Street involvement in the Bolshevik cause. The AmericanRed Cross Mission to Russia was a private venture of William B. Thompson, whopublicly proffered partisan support to the Bolsheviks. British War Cabinetpapers now available record that British policy was diverted towards theLenin-Trotsky regime by the personal intervention of Thompson with LloydGeorge in December 1917. We have reproduced statements by director Thompson and deputy chairman William Lawrence Saunders, both of theFederal Reserve Bank of New York, strongly favoring the Bolshevists. J ohnReed not only was financed from Wall Street, but had consistent support forhis activities, even to the extent of intervention with the State Departmentfrom William Franklin Sands, executive secretary of American InternationalCorporation. In the sedition case of Robert Minor there are strong indicationsand some circumstantial evidence that Colonel Edward House intervened tohave Minor released. The significance of the Minor case is that William B. Thompson's program for Bolshevik revolution in Germany was the veryprogram Minor was implementing when arrested in Germany.

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Some international agents, for example Alexander Gumberg, worked for WallStreet and the Bolsheviks. In 1917 Gumberg was the representative of a U.S.firm in Petrograd, worked for Thompson's American Red Cross Mission,became chief Bolshevik agent in Scandinavia until he was deported fromNorway, then became confidential assistant to Reeve Schley of Chase Bank

in New York and later to Floyd Odium of Atlas Corporation.

This activity in behalf of the Bolsheviks originated in large part from a singleaddress: 120 Broadway, New York City. The evidence for this observation isoutlined but no conclusive reason is given for the unusual concentration of activity at a single address, except to state that it appears to be the foreigncounterpart of Carroll Quigley's claim that J .P. Morgan infiltrated thedomestic left. Morgan also infiltrated the international left.

The Federal Reserve Bank of New York was at 120 Broadway. The vehicle forthis pro-Bolshevik activity was American International Corporation — at 120

Broadway. AIC views on the Bolshevik regime were requested by Secretary of State Robert Lansing only a few weeks after the revolution began, and Sands,executive secretary of AIC, could barely restrain his enthusiasm for theBolshevik cause. Ludwig Martens, the Soviet's first ambassador, had beenvice president of Weinberg & Posner, which was also located at 120-Broadway. Guaranty Trust Company was next door at 140 Broadway butGuaranty Securities Co. was at 120 Broadway. In 1917 Hunt, Hill & Betts was at120 Broadway, and Charles B. Hill of this firm was the negotiator in the Sun Yat-sen dealings. J ohn MacGregor Grant Co., which was financed by Olof Aschberg in Sweden and Guaranty Trust in the United States, and which was

on the Military Intelligence black list, was at 120 Broadway. The Guggenheimsand the executive heart of General Electric (also interested in AmericanInternational) were at 120 Broadway. We find it therefore hardly surprisingthat the Bankers Club was also at 120 Broadway, on the top floor (the thirty-fourth).

It is significant that support for the Bolsheviks did not cease with consolidationof the revolution; therefore, this support cannot be wholly explained in termsof the war with Germany. The American-Russian syndicate formed in 1918 toobtain concessions in Russia was backed by the White, Guggenheim, andSinclair interests. Direc tors of companies controlled by these three financ iers

included Thomas W. Lamont (Guaranty Trust), William Boyce Thompson(Federal Reserve Bank), and J ohn Reed's employer Harry Payne Whitney(Guaranty Trust). This strongly suggests that the syndicate was formed to cashin on earlier support for the Bolshevik cause in the revolutionary period. Andthen we found that Guaranty Trust financially backed the Soviet Bureau inNew York in 1919.

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The first really concrete signal that previous political and financial supportwas paying off came in 1923 when the Soviets formed their first internationalbank, Ruskombank. Morgan associate Olof Aschberg became nominal headof this Soviet bank; Max May, a vice president of Guaranty Trust, became adirector of Ruskom-bank, and the Ruskombank promptly appointed

Guaranty Trust Company its U.S. agent.

THE EXPLANATION FOR THE UNHOLY ALLIANCE

What motive explains this coalition of capitalists and Bolsheviks?

Russia was then — and is today — the largest untapped market in the world.Moreover, Russia, then and now, constituted the greatest potentialcompetitive threat to American industrial and financial supremacy. (Aglance at a world map is sufficient to spotlight the geographical differencebetween the vast land mass of Russia and the smaller United States.) WallStreet must have cold shivers when it visualizes Russia as a second superAmerican industrial giant.

But why allow Russia to become a competitor and a challenge to U.S.supremacy? In the late nineteenth century, Morgan/Rockefeller, andGuggenheim had demonstrated their monopolistic proclivities. In Railroads

and Regulation 1877-1916 Gabriel Kolko has demonstrated how the railroadowners, not the farmers, wanted state control of railroads in order to preservetheir monopoly and abolish competition. So the simplest explanation of our

evidence is that a syndicate of Wall Street financiers enlarged their monopolyambitions and broadened horizons on a global scale. The gigantic Russian

market was to be converted into a captive market and a technical colony to

be exploited by a few high-powered American financiers and thecorporations under their control. What the Interstate Commerce Commissionand the Federal Trade Commission under the thumb of American industrycould achieve for that industry at home, a planned socialist governmentcould achieve for it abroad — given suitable support and inducements fromWall Street and Washington, D.C.

Finally, lest this explanation seem too radical, remember that it was Trotsky

who appointed tsarist generals to consolidate the Red Army; that it was Trotsky who appealed for American officers to control revolutionary Russiaand intervene in behalf of the Soviets; that it was Trotsky who squashed firstthe libertarian element in the Russian Revolution and then the workers andpeasants; and that recorded history totally ignores the 700,000-man GreenArmy composed of ex-Bolsheviks, angered at betrayal of the revolution, whofought the Whites and the Reds. In other words, we are suggesting that the

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Bolshevik Revolution was an alliance of statists: statist revolutionaries andstatist financiers aligned against the genuine revolutionary libertarianelements in Russia.3

'The question now in the readers' minds must be, were these bankers also

secret Bolsheviks? No, of course not. The financiers were without ideology. Itwould be a gross misinterpretation to assume that assistance for theBolshevists was ideologically motivated, in any narrow sense. The financierswere power-motivated and therefore assisted any political vehicle thatwould give them an entree to power: Trotsky, Lenin, the tsar, Kolchak, Denikin— all received aid, more or less. All, that is, but those who wanted a truly freeindividualist soc iety.

Neither was aid restricted to statist Bolsheviks and statist counter-Bolsheviks. J ohn P. Diggins, in Mussolini and Fascism: The View from America,4 has notedin regard to Thomas Lamont of Guaranty Trust that

Of all American business leaders, the one who most vigorously patronized thecause of Fascism was Thomas W. Lamont. Head of the powerful J .P. Morganbanking network, Lamont served as something of a business consultant forthe government of Fascist Italy.

Lamont secured a $100 million loan for Mussolini in 1926 at a particularlycrucial time for the Italian dictator. We might remember too that the directorof Guaranty Trust was the father of Corliss Lamont, a domestic Communist. This evenhanded approach to the twin totalitarian systems, communism andfascism, was not confined to the Lamont family. For example, Otto Kahn,

director of American International Corporation and of Kuhn, Leob & Co., feltsure that "American capital invested in Italy will find safety, encouragement,opportunity and reward."5 This is the same Otto Kahn who lectured thesocialist League of Industrial Democracy in 1924 that its objectives were his

objectives.6 They differed only — according to Otto Kahn — over the meansof achieving these objectives.

Ivy Lee, Rockefeller's public relations man, made similar pronouncements,and was responsible for selling the Soviet regime to the gullible Americanpublic in the late 1920s. We also have observed that Basil Miles, in charge of the Russian desk at the State Department and a former associate of WilliamFranklin Sands, was decidedly helpful to the businessmen promoting Bolshevikcauses; but in 1923 the same Miles authored a profascist article, "Italy's BlackShirts and Business."7 "Success of the Fascists is an expression of Italy's youth,"wrote Miles while glorifying the fascist movement and applauding its esteemfor American business.

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But Leon Trotsky also declared himself an internationalist. We have remarkedwith some interest his high-level internationalist connections, or at leastfriends, in Canada. Trotsky then was not pro-Russian, or pro-Allied, or pro-German, as many have tried to make him out to be. Trotsky was for worldrevolution, for world dictatorship; he was, in one word, an internationalist.13

Bolshevists and bankers have then this significant common ground —internationalism. Revolution and international finance are not at allinconsistent if the result of revolution is to establish more centralized authority.International finance prefers to deal with central governments. The last thingthe banking community wants is laissez-faire economy and decentralizedpower because these would disperse power.

This, therefore, is an explanation that fits the evidence. This handful of bankersand promoters was not Bolshevik, or Communist, or socialist, or Democrat, oreven American. Above all else these men wanted markets, preferablycaptive international markets — and a monopoly of the captive worldmarket as the ultimate goal. They wanted markets that could be exploitedmonopolistically without fear of competition from Russians, Germans, oranyone else — including American businessmen outside the charmed circle. This closed group was apolitical and amoral. In 1917, it had a single-mindedobjective — a captive market in Russia, all presented under, andintellectually protected by, the shelter of a league to enforce the peace.

Wall Street did indeed achieve its goal. American firms controlled by thissyndicate were later to go on and build the Soviet Union, and today are wellon their way to bringing the Soviet military-industrial complex into the age of

the computer.

Today the objective is still alive and well. J ohn D. Rockefeller expounds it in hisbook The Second American Revolution — which sports a five-pointed star onthe title page.14 The book contains a naked plea for humanism, that is, a pleathat our first priority is to work for others. In other words, a plea for collec tivism.Humanism is collec tivism. It is notable that the Rockefellers, who havepromoted this humanistic idea for a century, have not turned their OWNproperty over to others.. Presumably it is implicit in their recommendation thatwe all work for the Rockefellers. Rockefeller's book promotes collectivismunder the guises of "cautious conservatism" and "the public good." It is in

effect a plea for the continuation of the earlier Morgan-Rockefeller supportof collec tivist enterprises and mass subversion of individual rights.

In brief, the public good has been, and is today, used as a device and anexcuse for self-aggrandizement by an elitist circle that pleads for worldpeace and human decency. But so long as the reader looks at world historyin terms of an inexorable Marxian conflict between capitalism andcommunism, the objectives of such an alliance between international

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finance and international revolution remain elusive. So will the ludicrousnessof promotion of the public good by plunderers. If these alliances still eludethe reader, then he should ponder the obvious fact that these sameinternational interests and promoters are always willing to determine whatother people should do, but are signally unwilling to be first in line to give up

their own wealth and power. Their mouths are open, their pockets are c losed.

This technique, used by the monopolists to gouge soc iety, was set forth in theearly twentieth century by Frederick C. Howe in The Confessions of a

Monopolist.15 First, says Howe, politics is a necessary part of business. Tocontrol industries it is necessary to control Congress and the regulators andthus make society go to work for you, the monopolist. So, according to Howe,the two principles of a successful monopolist are, "First, let Society work foryou; and second, make a business of politics."16 These, wrote Howe, are thebasic "rules of big business."

Is there any evidence that this magnificently sweeping objective was alsoknown to Congress and the academic world? Certainly the possibility wasknown and known publicly. For example, witness the testimony of Albert RhysWilliams, an astute commentator on the revolution, before the SenateOverman Committee:

. . . it is probably true that under the soviet government industrial life willperhaps be much slower in development than under the usual capitalisticsystem. But why should a great industrial country like America desire thecreation and consequent competition of another great industrial rival? Arenot the interests of America in this regard in line with the slow tempo of development which soviet Russia projects for herself?

Senator Wolcott: Then your argument is that it would be to the interest of America to have Russia repressed?

MR. WILLIAMS: Not repressed ....

SENATOR WOLCOTT: You say. Why should America desire Russia to becomean industrial competitor with her?

MR. WILLIAMS: This is speaking from a capitalistic standpoint. The whole

interest of America is not, I think, to have another great industrial rival, likeGermany, England, France, and Italy, thrown on the market in competition. Ithink another government over there besides the Soviet government wouldperhaps increase the tempo or rate of development of Russia, and we wouldhave another rival. Of course, this is arguing from a capitalistic standpoint.

SENATOR WOLCOTT: So you are presenting an argument here which you thinkmight appeal to the American people, your point being this, that if we

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recognize the Soviet government of Russia as it is constituted we will berecognizing a government that can not compete with us in industry for agreat many years?

MR. WILLIAMS: That is a fact.

SENATOR WOLCOTT: That is an argument that under the Soviet governmentRussia is in no position, for a great many years at least, to approach Americaindustrially?

MR. WILLIAMS: Absolutely.17

And in that forthright statement by Albert Rhys Williams is the basic clue to therevisionist interpretation of Russian history over the past half century.

Wall Street, or rather the Morgan-Rockefeller complex represented at 120Broadway and 14 Wall Street, had something very close to Williams' argument

in mind. Wall Street went to bat in Washington for the Bolsheviks. Itsucceeded. The Soviet totalitarian regime survived. In the 1930s foreign firms,mostly of the Morgan-Rockefeller group, built the five-year plans. They havecontinued to build Russia, economically and militarily.18 On the other hand,Wall Street presumably did not foresee the Korean War and the Vietnam War— in which 100,000 Americans and countless allies lost their lives to Sovietarmaments built with this same imported U.S. technology. What seemed afarsighted, and undoubtedly profitable, policy for a Wall Street syndicate,became a nightmare for millions outside the elitist power circle and the rulingclass.

Footnotes:

1Michael Futrell, Northern Underground (London: Faber and Faber, 1963);

Stefan Possony, Lenin: The Compulsive Revolutionary (London: George Allen& Unwin, 1966); and George Katkov, "German Foreign Office Documents onFinancial Support to the Bolsheviks in 1917," International Affairs 32 (RoyalInstitute of International Affairs, 1956).

2Ibid., especially Katkov.

3See also Voline (V.M. Eichenbaum), Nineteen-Seventeen: The Russian

Revolution Betrayed (New York: Libertarian Book Club, n.d.).

4Princeton, N.J .: Princeton University Prss, 1972.

5Ibid., p. 149.

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6See p. 49.

7Nation's Business, February 1923, pp. 22-23.

8

J ennings C. Wise,Woodrow Wilson: Disciple of Revolution

(New York: PaisleyPress, 1938), p.45

9Ibid., p.46

10See p. 89.

11Morris Hillquit, Loose Leaves from a Busy Life (New York: Macmillan, 1934), p.

81.

12Wise, op. cit., p. 647

13Leon Trotsky, The Bolsheviki and World Peace (New York: Boni & Liveright,

1918).

14In May 1973 Chase Manhattan Bank (chairman, David Rockefeller) opened

it Moscow office at 1 Karl Marx Square, Moscow. The New York office is at 1Chase Manhattan Plaza.

15Chicago: Public Publishin, n.d.

16

Ibid.

17U.S., Senate, Bolshevik Propaganda , hearings before a subcommittee of the

Committee on the J udiciary, 65th Cong., pp. 679-80. See also herein p. 107for the role of Williams in Radek's Press Bureau.

18See Antony C. Sutton, Western Technology and Soviet Economic

Development, 3 vols. (Stanford, Calif.: Hoover Institution, 1968, 1971, 1973);see also National Suicide: Military Aid to the Soviet Union (New York: ArlingtonHouse, 1973).

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Appendix I

DIRECTORS OF MAJ OR BANKS, FIRMS,AND INSTITUTIONS MENTIONED IN THIS

BOOK (AS IN 1917-1918)

AMERICAN INTERNATIONAL CORPORATION (120 Broadway) J . Ogden Armour Percy A. Rockefeller

G. J . Baldwin J ohn D. Ryan

C. A. Coffin W.L. Saunders

W. E. Corey J .A. Stillman

Robert Dollar C.A. Stone

Pierre S. du Pont T.N. Vail

Philip A. S. Franklin F.A. Vanderlip

J . P. Grace E.S. Webster

R. F. Herrick A.H. Wiggin

Otto H. Kahn Beckman WinthropH. W. Pritchett William Woodward

CHASE NATIONAL BANK J . N. Hill Newcomb Carlton

A. B. Hepburn D.C. J ackling

S. H. Miller E.R. Tinker

C. M. Schwab A.H. WigginH. Bendicott J ohn J . Mitchell

Guy E. Tripp

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Walter D. Hines London Committee:

Augustus D. J ulliard Arthur J . Fraser (Chairman)

Thomas W. Lamont Cecil F. Parr

William C. Lane Robert Callander

NATIONAL CITY BANK P. A. S. Franklin P.A. Rockefeller

J .P. Grace J ames Stillman

G. H. Dodge W. Rockefeller

H. A. C. Taylor J . O. Armour

R. S. Lovett J .W. Sterling

F. A. Vanderlip J .A. Stillman

G. H. Miniken M.T. PyneE. P. Swenson E.D. Bapst

Frank Trumbull J .H. Post

Edgar Palmer W.C. Proc ter

NATIONALBANK FÜR DEUTSCHLAND(As in 1914, Hjalmar Schacht joined board in 1918)

Emil Wittenberg Hans Winterfeldt

Hjalmar Schacht Th Marba

Martin Schiff Paul Koch

Franz Rintelen

SINCLAIR CONSOLIDATED OIL CORPORATION (120 Broadway)

Harry F. Sinclair J ames N. WallaceH. P. Whitney Edward H. Clark

Wm. E. Corey Daniel C. J ackling

Wm. B. Thompson Albert H. Wiggin

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J. G. WHITE ENGINEERING CORPORATION

J ames Brown C.E. Bailey

Douglas Campbell J .G. White

G. C. Clark, J r. Gano Dunn

Bayard Dominick, J r. E.G. Williams

A. G. Hodenpyl A.S. Crane

T. W. Lamont H.A. Lardner

Marion McMillan G.H. Kinniat

J . H. Pardee A.F. Kountz

G. H. Walbridge R.B. Marchant

E. N. Chilson Henry Parsons

A. N. Connett

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Appendix II

THE J EWISH-CONSPIRACY THEORY OF

THE BOLSHEVIK REVOLUTION

There is an extensive literature in English, French, and German reflecting theargument that the Bolshevik Revolution was the result of a "J ewishconspiracy"; more specifica lly, a conspiracy by Jewish world bankers.Generally, world control is seen as the ultimate objective; the BolshevikRevolution was but one phase of a wider program that supposedly reflectsan age-old religious struggle between Christianity and the "forces of darkness."

The argument and its variants can be found in the most surprising places andfrom quite surprising persons. In February 1920 Winston Churchill wrote anarticle — rarely cited today — for the London Illustrated Sunday Herald

entitled "Zionism Versus Bolshevism." In this' article Churchill concluded that itwas "particularly important... that the National Jews in every country who areloyal to the land of their adoption should come forward on every occasion . .. and take a prominent part in every measure for combatting the Bolshevikconspiracy." Churchill draws a line between "national J ews" and what he calls"international J ews." He argues that the "international and for the mostatheistical J ews" certainly had a "very great" role in the creation of Bolshevismand bringing about the Russian Revolution. He asserts (contrary to fact) thatwith the exception of Lenin, "the majority" of the leading figures in therevolution were J ewish, and adds (also contrary to fact) that in many cases J ewish interests and J ewish places of worship were excepted by theBolsheviks from their policies of seizure. Churchill calls the international J ews a"sinister confederacy" emergent from the persecuted populations of countrieswhere J ews have been persecuted on account of their race. WinstonChurchill traces this movement back to Spartacus-Weishaupt, throws hisliterary net around Trotsky, Bela Kun, Rosa Luxemburg, and Emma Goldman,and charges: "This world-wide conspiracy for the overthrow of civilisation and

for the reconstitution of society on the basis of arrested development, of envious malevolence, and impossible equality, has been steadily growing."

Churchill then argues that this conspiratorial Spartacus-Weishaupt group hasbeen the mainspring of every subversive movement in the nineteenthcentury. While pointing out that Zionism and Bolshevism are competing forthe soul of the J ewish people, Churchill (in 1920) was preoccupied with therole of the J ew in the Bolshevik Revolution and the existence of a worldwide

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J ewish conspiracy.

Another well-known author in the 1920s, Henry Wickham Steed describes inthe second volume of his Through 30 Years 1892-1922 (p. 302) how heattempted to bring the J ewish-conspiracy concept to the attention of

Colonel Edward M. House and President Woodrow Wilson. One day in March1919 Wickham Steed called Colonel House and found him disturbed overSteed's recent criticism of U.S. recognition of the Bolsheviks. Steed pointed outto House that Wilson would be discredited among the many peoples andnations of Europe and "insisted that, unknown to him, the prime movers were J acob Schiff, Warburg and other international financiers, who wished aboveall to bolster up the J ewish Bolshevists in order to secure a field for Germanand J ewish exploitation of Russia."1 According to Steed, Colonel Houseargued for the establishment of economic relations with the Soviet Union.

Probably the most superficially damning collection of documents on the

J ewish conspiracy is in the State Department Decimal File (861.00/5339). Thecentral document is one entitled "Bolshevism and J udaism," dated November13, 1918. The text is in the form of a report, which states that the revolution inRussia was engineered "in February 1916" and "it was found that the followingpersons and firms were engaged in this destructive work":

(1) J acob Schiff J ew

(2) Kuhn, Loeb & Company J ewish Firm

Management: J acob Schiff J ew

Felix Warburg J ewOtto H. Kahn J ew

Mortimer L. Schiff J ew

J erome J . Hanauer J ew

(3) Guggenheim J ew

(4) Max Breitung J ew

(5) Isaac Seligman J ew

The report goes on to assert that there can be no doubt that the RussianRevolution was started and engineered by this group and that in April 1917

J acob Schiff in fact made a public announcement and it was due to hisfinancial influence that the Russian revolution was successfully accomplishedand in the Spring 1917 Jacob Schitf started to finance Trotsky, a J ew, for thepurpose of accomplishing a soc ial revolution in Russia.

The report contains other miscellaneous information about Max Warburg's

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financing of Trotsky, the role of the Rheinish-Westphalian syndicate and Olof Aschberg of the Nya Banken (Stockholm) together with J ivotovsky. Theanonymous author (actually employed by the U.S. War Trade Board)2 statesthat the links between these organizations and their financing of the BolshevikRevolution show how "the link between J ewish multi-millionaires and J ewish

proletarians was forged." The report goes on to list a large number of Bolsheviks who were also J ews and then describes the actions of PaulWarburg, J udus Magnes, Kuhn, Loeb & Company, and Speyer & Company.

The report ends with a barb at "International J ewry" and places the argumentinto the context of a Christian-Jewish conflict backed up by quotations fromthe Protocols of Zion. Accompanying this report is a series of cables betweenthe State Department in Washington and the American embassy in Londonconcerning the steps to be taken with these documents:3

5399 Great Britain, TEL. 3253 i pm

October 16, 1919 In Confidential File Secret for Winslow from Wright.Financial aid to Bolshevism & Bolshevik Revolution in Russia from prominentAm. Jews: J acob Schiff, Felix Warburg, Otto Kahn, Mendell Schiff, J eromeHanauer, Max Breitung & one of the Guggenheims. Document re- inpossession of Brit. police authorities from French sources. Asks for any facts re-.

* * * * *

Oct. 17 Great Britain TEL. 6084, noon r c-h 5399 Very secret. Wright fromWinslow. Financial aid to Bolshevik revolution in Russia from prominent Am. J ews. No proof re- but investigating. Asks to urge Brit. authorities to suspend

publication at least until receipt of document by Dept.

* * * * *

Nov. 28 Great Britain TEL. 6223 R 5 pro. 5399 FOR WRIGHT. Document refinanc ial aid to Bolsheviki by prominent American jews. Reports — identifiedas French translation of a statement originally prepared in English by Russiancitizen in Am. etc. Seem most unwise to give — the distinction of publicity.

It was agreed to suppress this material and the files conclude, "I think wehave the whole thing in cold storage."

Another document marked "Most Secret" is included with this batch of material. The provenance of the document is unknown; it is perhaps FBI ormilitary intelligence. It reviews a translation of the Protocols of the Meetings of the Wise Men of Zion, and concludes:

In this connection a letter was sent to Mr. W. enclosing a memorandum fromus with regard to certain information from the American Military Attache tothe effec t that the British authorities had letters intercepted from various

162



groups of international J ews setting out a scheme for world dominion. Copiesof this material will be very useful to us.

This information was apparently developed and a later British intelligencereport makes the flat accusation:

SUMMARY: There is now definite evidence that Bolshevism is an internationalmovement controlled by J ews; communications are passing between theleaders in America, France, Russia and England with a view to concertedaction....4

However, none of the above statements can be supported with hardempirical evidence. The most significant information is contained in theparagraph to the effec t that the British authorities possessed "lettersintercepted from various groups of international Jews setting out a schemefor world dominion." If indeed such letters exist, then they would providesupport (or nonsupport) for a presently unsubstantiated hypothesis: to wit,

that the Bolshevik Revolution and other revolutions are the work of aworldwide J ewish conspiracy.

Moveover, when statements and assertions are not supported by hardevidence and where attempts to unearth hard evidence lead in a circleback to the starting point — particularly when everyone is quoting everyoneelse — then we must reject the story as spurious. There is no concrete

evidence that J ews were involved in the Bolshevik Revolution because they

were Jewish. There may indeed have been a higher proportion of J ewsinvolved, but given tsarist treatment of J ews, what else would we expect? There were probably many Englishmen or persons of English origin in the

American Revolution fighting the redcoats. So what? Does that make theAmerican Revolution an English conspiracy? Winston Churchill's statementthat J ews had a "very great role" in the Bolshevik Revolution is supported onlyby distorted evidence. The list of J ews involved in the Bolshevik Revolutionmust be weighed against lists of non-J ews involved in the revolution. Whenthis scientific procedure is adopted, the proportion of foreign J ewishBolsheviks involved falls to less than twenty percent of the total number of revolutionaries — and these J ews were mostly deported, murdered, or sent toSiberia in the following years. Modern Russia has in fact maintained tsaristanti-Semitism.

It is significant that documents in the State Department files confirm that theinvestment banker Jacob Schiff, often c ited as a source of funds for theBolshevik Revolution, was in fact against support of the Bolshevik regime.5 Thisposition, as we shall see, was in direct contrast to the Morgan-Rockefellerpromotion of the Bolsheviks.

The persistence with which the J ewish-conspiracy myth has been pushed

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suggests that it may well be a deliberate device to divert attention from thereal issues and the real causes. The evidence provided in this book suggeststhat the New York bankers who were also J ewish had relatively minor roles insupporting the Bolsheviks, while the New York bankers who were also Gentiles(Morgan, Rockefeller, Thompson) had major roles.

What better way to divert attention from the real operators than by themedieval bogeyman of anti-Semitism?

Footnotes:

1See Appendix 3 for Schiff's actual role.

2 The anonymous author was a Russian employed by the U.S. War TradeBoard. One of the three directors of the U.S. War Trade Board at this time was J ohn Foster Dulles.


4Great Britain, Direc torate of Intelligence, A Monthly Review of the Progress of

Revolutionary Movements Abroad, no. 9, July 16, 1913 (861.99/5067).

5See Appendix 3.

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DOCUMENT NO. 1

Cable from Ambassador Francis in Petrograd to the Department of State inWashington, D.C., dated March 14, 1917, and reporting the first stage of theRussian Revolution (861.00/273).

Petrograd Dated March 14, 1917, Recd. 15th, 2:30 a.m.

Secretary of State, Washington

1287. Unable to send a cablegram since the eleventh. Revolutionists haveabsolute control in Petrograd and are making strenuous efforts to preserveorder, which successful except in rare instances. No cablegrams since your1251 of the ninth, received March eleventh. Provisional governmentorganized under the authority of the Douma which refused to obey theEmperor's order of the adjournment. Rodzianko, president of the Douma,issuing orders over his own signature. Ministry reported to have resigned.Ministers found are taken before the Douma, also many Russian officers andother high officials. Most if not all regiments ordered to Petrograd have joinedthe revolutionists after arrival. American colony safe. No knowledge of anyinjuries to American c itizens.

FRANC IS, American Ambassador

On receipt of the preceding cable, Robert Lansing, Secretary of State, madeits contents available to President Wilson (861.00/273):

PERSONAL AND CONFIDENTIAL

My Dear Mr. President:

I enclose to you a very important cablegram which has just come fromPetrograd, and also a clipping from the New York WORLD of this morning, inwhich a statement is made by Signor Scialoia, Minister without portfolio in theItalian Cabinet, which is significant in view of Mr. Francis' report. My ownimpression is that the Allies know of this matter and I presume are favorable tothe revolutionists since the Court party has been, throughout the war,

secretely pro-German.

Faithfully yours, ROBERT LANSING

Enclosure: The President, The White House

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COMMENT

The significant phrase in the Lansing-Wilson letter is "My own impression is thatthe Allies know of this matter and I presume are favorable to the revolutionistssince the Court party has been, throughout the war, sec retely pro-German." It

will be recalled (chapter two) that Ambassador Dodd claimed that CharlesR. Crane, of Westinghouse and of Crane Co. in New York and an adviser toPresident Wilson, was involved in this first revolution.

DOCUMENT NO. 2

Memorandum from Great Britain Foreign Office file FO 371/ 2999 (The War —Russia), October 23, 1917, file no. 3743.

DOCUMENT

Personal (and) Secret.

Disquieting rumors have reached us from more than one source thatKerensky is m German pay and that he and his government are doing theirutmost to weaken (and) disorganize Russia, so as to arrive at a situation whenno other course but a separate peace would be possible. Do you considerthat there is any ground for such insinuations, and that the government byrefraining from any effec tive action are purposely allowing the Bolshevist

elements to grow stronger?

If it should be a question of bribery we might be able to compete successfullyif it were known how and through what agents it could be done, although it isnot a pleasant thought.

COMMENT

Refers to information that Kerensky was in German pay.

DOCUMENT NO. 3

Consists of four parts:

(a) Cable from Ambassador Francis, April 27, 1917, in Petrograd toWashington, D.C., requesting transmission of a message from prominentRussian J ewish bankers to prominent J ewish bankers in New York and

167



requesting their subscription to the Kerensky Liberty Loan (861.51/139).

(b) Reply from Louis Marshall (May 10, 1917) representing American J ews; hedec lined the invitation while expressing support for the American Liberty Loan(861.51/143).

(c) Letter from J acob Schiff of Kuhn, Loeb (November 25, 1918) to StateDepartment (Mr. Polk) relaying a message from Russian J ewish bankerKamenka calling for Allied help against the Bolsheviks ("because Bolshevistgovernment does not represent Russian People").

(d) Cable from Kamenka relayed by Jacob Schiff.

DOCUMENTS

(a) Secretary of State Washington. 1229, twenty-seventh.

Please deliver following to J acob Schiff, J udge Brandies [sic], ProfessorGottheil, Oscar Strauss [sic], Rabbi Wise, Louis Marshall and Morgenthau:

"We Russian J ews always believed that liberation of Russia meant also ourliberation. Being deeply devoted to country we placed implicit trusttemporary Government. We know the unlimited economic power of Russiaand her immense natural resources and the emancipation we obtained willenable us to participate development country. We firmly believe thatvictorious finish of the war owing help our allies and United States is near.

Temporary Government issuing now new public loan of freedom and we feelour national duty support loan high vital for war and freedom. We are surethat Russia has an unshakeable power of public credit and will easily beara.11 necessary financial burden. We formed special committee of Russian J ews for supporting loan consisting representatives financial, industrial tradingcircles and leading public men.

We inform you here of and request our brethern beyong [sic] the seas tosupport freedom of Russian which became now case humanity and world'scivilization. We suggest you form there special committee and let us know of

steps you may take J ewish committee support success loan of freedom. BorisKamenka, Chairman, Baron Alexander Gunzburg, Henry Silosberg."

FRANCIS

* * * * *

168



(b) Dear Mr. Sec retary:

After reporting to our associates the result of the interview which you kindlygranted to Mr. Morgenthau, Mr. Straus and myself, in regard to theadvisability of calling for subscriptions to the Russian Freedom Loan as

requested in the cablegram of Baron Gunzburg and Messrs. Kamenka andSilosberg of Petrograd, which you recently communicated to us, we haveconcluded to act strictly upon your advice. Several days ago we promisedour friends at Petrograd an early reply to their call for aid. We would thereforegreatly appreciate the forwarding of the following cablegram, provided itsterms have your approval:

"Boris Kamenka, Don Azov Bank, Petrograd.

Our State Department which we have consulted regards any presentattempt toward securing public subscriptions here for any foreign loans

inadvisable; the concentration of all efforts for the success of American warloans being essential, thereby enabling our Government to supply funds to itsallies at lower interest rates than otherwise possible. Our energies to help theRussian cause most effectively must therefore necessarily be direc ted toencouraging subscriptions to American Liberty Loan. Schiff, Marshall, Straus,Morgenthau, Wise, Gonheil."

You are of course at liberty to make any changes in the phraseology of thissuggested cablegram which you may deem desirable and which willindicate that our failure to respond directly to the request that has come tous is due to our anxiety to make our activities most efficient.

May I ask you to send me a copy of the cablegram as forwarded, with amemorandum of the cost so that the Department may be promptlyreimbursed.

I am, with great respec t, Faithfully yours, [sgd.] Louis Marshall

The Secretary of State Washington, D.C.

* * * * *

(c) Dear Mr. Polk:

Will you permit me to send you copy of a cablegram received this morningand which I think, for regularity's sake, should be brought to the notice of theSecretary of State or your good self, for such consideration as it might bethought well to give this.

Mr. Kamenka, the sender of this cablegram, is one of the leading men inRussia and has, I am informed, been financial advisor both of the Prince Lvoff

169



government and of the Kerensky government. He is President of the Banquede Commerce de l'Azov Don of Petrograd, one of the most importantfinanc ial institutions of Russia, but had, likely, to leave Russia with the adventof Lenin and his "comrades."

Let me take this opportunity to send sincere greetings to you and Mrs. Polkand to express the hope that you are now in perfect shape again, and thatMrs. Polk and the children are in good health.

Faithfully yours, [sgd.] J acob H. Schiff

Hon. Frank L. Polk Counsellor of the State Dept. Washington, D.C.

MM-Encl.

[Dated November 25, 1918]

* * * * *

(d) Translation:

The complete triumph of liberty and right furnishes me a new opportunity torepeat to you my profound admiration for the noble American nation. Hopeto see now quick progress on the part of the Allies to help Russia inreestablishing order. Call your attention also to pressing necessity of replac ingin Ukraine enemy troops at the very moment of their retirement in order toavoid Bolshevist devastation. Friendly intervention of Allies would be greetedeverywhere with enthusiasm and looked upon as democratic action,

because Bolshevist government does not represent Russian people. Wroteyou September 19th. Cordial greetings.

[sgd.] Kamenka

COMMENT

This is an important series because it refutes the story of a J ewish bankconspiracy behind the Bolshevik Revolution. Clearly J acob Schiff of Kuhn,Loeb was not interested in supporting the Kerensky Liberty Loan and Schiff

went to the trouble of drawing State Department attention to Kamenka'spleas for Allied intervention against the Bolsheviks. Obviously Schiff and fellowbanker Kamenka, unlike J .P. Morgan and J ohn D. Rockefeller, were asunhappy about the Bolsheviks as they had been about the tsars.

170



DOCUMENT NO. 4

Description

Memorandum from William Boyce Thompson (direc tor of the Federal ReserveBank of New York) to Lloyd George (prime minister of Great Britain),December 1917.

DOCUMENT

FIRST

The Russian situation is lost and Russia lies entirely open to unopposedGerman exploitation unless a radical reversal of policy is at once undertakenby the Allies.

SECOND

Because of their shortsighted diplomacy, the Allies since the Revolution haveaccomplished nothing beneficial, and have done considerable harm to theirown interests.

THIRD

The Allied representatives in Petrograd have been lacking in sympatheticunderstanding of the desire of the Russian people to attain democracy. Ourrepresentatives were first connected officially with the Czar's regime.

Naturally they have been influenced by that environment.

FOURTH

Meanwhile, on the other hand, the Germans have conducted propagandathat has undoubtedly aided them materially in destroying the Government, inwrecking the army and in destroying trade and industry. If this continuesunopposed it may result in the complete exploitation of the great country byGermany against the Allies.

FIFTH

I base my opinion upon a careful and intimate study of the situation bothoutside and inside official circles, during my stay in Petrograd betweenAugust 7 and November 29, 1917.

SIXTH

"What can be done to improve the situation of the Allies in Russia"?

171



The diplomatic personnel, both British and American, should be changed toone democratic in spirit and capable of sustaining democratic sympathy.

There should be erected a powerful, unofficial committee, with headquartersin Petrograd, to operate in the background, so to speak, the influence of

which in matters of policy should be recognized and accepted by theDIPLOMATIC, CONSULAR and MILITARY officials of the Allies. Such committeeshould be so composed in personnel as to make it possible to entrust to itwide discretionary powers. It would presumably undertake work in variouschannels. The nature of which will become obvious as the task progress. es; it.would aim to meet all new conditions as they might arise.

SEVENTH

It is impossible now to define at all completely the scope of this new Alliedcommittee. I can perhaps assist to a better understanding of its possible

usefulness and service by making a brief reference to the work which Istarted and which is now in the hands of Raymond Robins, who is well andfavorably known to Col. Buchan — a work which in the future willundoubtedly have to be somewhat altered and added to in order to meetnew conditions. My work has been performed chiefly through a Russian"Committee on C ivic Education" aided by Madame Breshkovsky, theGrandmother of the Revolution. She was assisted by Dr. David Soskice, theprivate secretary of the then Prime Minister Kerensky (now of London);Nicholas Basil Tchaikovsky, at one time Chairman of the Peasants Co-operative Society, and by other substantial social revolutionaries constitutingthe saving element of democracy as between the extreme "Right" of theofficial and property-owning class, and the extreme "Left" embodying themost radical elements of the soc ialistic parties. The aim of this committee, asstated in a cable message from Madame Breshkovsky to President Wilson,can be gathered from this quotation: "A widespread education is necessaryto make Russia an orderly democracy. We plan to bring this education to thesoldier in the camp, to the workman in the factory, to the peasant in thevillage." Those aiding in this work realized that for centuries the masses hadbeen under the heel of Autocracy which had given them not protection butoppression; that a democratic form of government in Russian could bemaintained only BY THE DEFEAT OF THE GERMAN ARMY; BY THE OVERTHROW

OF GERMAN AUTOCRAC Y. Could free Russia, unprepared for greatgovernmental responsibilities, uneducated, untrained, be expected long tosurvive with imperial Germany her next door neighbor? Certainly not.Democratic Russia would become speedily the greatest war prize the worldhas even known.

The Committee designed to have an educational center in each regiment of the Russian army, in the form of Soldiers' Clubs. These clubs were organized as

172



rapidly as possible, and lecturers were employed to address the soldiers. Thelecturers were in reality teachers, and it should be remembered that there isa percentage of 90 among the soldiers of Russia who can neither read norwrite. At the time of the Bolshevik outbreak many of these speakers were inthe field making a fine impression and obtaining excellent results. There were

250 in the city of Moscow alone. It was contemplated by the Committee tohave at least 5000 of these lecturers. We had under publication manynewspapers of the "A B C" class, printing matter in the simplest style, and wereassisting about 100 more. These papers carried the appeal for patriotism,unity and co-ordination into the homes of the workmen and the peasants.

After the overthrow of the last Kerensky government we materially aided thedissemination of the Bolshevik literature, distributing it through agents and byaeroplanes to the German army. If the suggestion is permissible, it might bewell to consider whether it would not be desirable to have this same Bolshevikliterature sent into Germany and Austria across the West and Italian fronts.

EIGHTH

The presence of a small number of Allied troops in Petrograd would certainlyhave done much to prevent the overthrow of the Kerensky government inNovember. I should like to suggest for your consideration, if present conditionscontinue, the concentration of all the British and French Governmentemployes in Petrograd, and if the necessity should arise it might be formedinto a fairly effective force. It might be advisable even to pay a small sum toa Russian force. There is also a large body of volunteers recruited in Russia,many of them included in the Inteligentzia of "Center" class, and these havedone splendid work in the trenches. They might properly be aided.

NINTH

If you ask for a further programme I should say that it is impossible to give itnow. I believe that intelligent and courageous work will still prevent Germanyfrom occupying the field to itself and thus exploiting Russia at the expense of the Allies. There will be many ways in which this service can be renderedwhich will become obvious as the work progresses.

COMMENT

Following this memorandum the British war cabinet changed its policy to oneof tepid pro-Bolshevism. Note that Thompson admits to distribution of Bolshevik literature by his agents. The confusion over the date on which

173



Thompson left Russia (he states November 29th in this document) is clearedup by the Pirnie papers at the Hoover Institution. There were several changesof travel plans and Thompson was still in Russia in early December. Thememorandum was probably written in Petrograd in late November.

DOCUMENT NO. 5

DESCRIPTION

Letter dated May 9, 1918, from Felix Frankfurter (then spec ial assistant to thesecretary of war) to Santeri Nuorteva (alias for Alexander Nyberg), a Bolshevikagent in the United States. Listed as Document No. 1544 in the LuskCommittee files, New York:

DOCUMENT

WAR DEPARTMENT WASHINGTON May 9, 1918

My dear Mr. Nhorteva [sic]:

Thank you very much for your letter of the 4th. I knew you would understandthe purely friendly and wholly unofficial character of our talk, and Iapprec iate the prompt steps you have taken to correc t your Sirola* letter. Be

wholly assured that nothing has transpired which diminishes my interest in thequestions which you present. Quite the contrary. I am much interested in**the considerations you are advancing and for the point of view you areurging. The issues*** at stake are the interests that mean much for the wholeworld. To meet them adequately we need a ll the knowledge and wisdom wecan possibly get**** .

Cordially yours, Felix Frankfurter

Santeri Nuorteva, Esq.

* Yrjo Sirola was a Bolshevik and commissar in Finland. ** Original text,"continually grateful to you for." *** Original text, "interests." **** Original textadded "these days."

174



COMMENT

This letter by Frankfurter was written to Nuorteva/Nyberg, a Bolshevik agent inthe United States, at a time when Frankfurter held an official position asspec ial assistant to Secretary of War Baker in the War Department.

Apparently Nyberg was willing to change a letter to commissar "Sirola"according to Frankfurter's instructions. The Lusk Committee acquired theoriginal Frankfurter draft including Frankfurter's changes and not the letterreceived by Nyberg.

THE SOVIET BUREAU IN 1920

Name Citizenship Born Former

Employment Position

Representative of USSR

LudwigC.A.K.

MARTENS

German Russia V-P of Weinberg &

PosnerEngineer ing

(120Broadway)

Officemanager

GregoryWEINSTEIN

Russian Russia J ournalist

Secretary SanteriNUORTEVA

Finnish Russia J ournalist

Assistant

secretary

Kenneth

DURANT

U.S. U.S. (1) U.S.

Committeeon Public

Information(2) Former

aide toColonelHouse

Privatesecre taryto NUOR

TEVA

DorothyKEEN

U.S. U.S. High school

Translator MaryMODELL

Russian Russia School inRussia

File clerk AlexanderCOLEMAN

U.S. U.S. High school

Telephoneclerk

BlancheABUSHEVITZ

Russian Russia High school

175



Officeattendant

NestorKUNTZEVICH

Russian Russia—

Militaryexpert

Lt. Col. Boris Tagueeff

Roustam BEK

Russian Russia Military criticon Daily

Express

(London)Commercial Department

Director A. HELLER Russian U.S. InternationalOxy gen

CompanySecretary Ella TUCH Russian U.S. U.S. firms

Clerk RoseHOLLAND

U.S. U.S. Gary SchoolLeague

Clerk HenriettaMEEROWICH

Russian Russia Social worker

Clerk Rose BYERS Russian Russia SchoolStatistician Vladimir

OLCHOVSKYRussian Russia Russian Army

Information Department Direc tor Evans

CLARK U.S. U.S. Princeton

UniversityClerk Nora G.

SMITHMANU.S. U.S. Ford Peace

ExpeditionSteno Etta FOX U.S. U.S. War Trade

Board

— Wilfred R.HUMPHRIES U.K. — AmericanRed CrossTechnical Dept.

Direc tor ArthurADAMS

Russian U.S.—

Educational Dept. Direc tor William

MALISSOFFRussian U.S. Columbia

UniversityMedical Dept.

Direc tor Leo A.

HUEBSCH

Russian U.S. Medical

doctorD. H.DUBROWSKY

Russian U.S. Medicaldoctor

Legal Dept. Director Morris

HILLQUITLithuanian — —

Counselretained:

176



CharlesRECHT

Dudley FieldMALONEGeorge

CordonBATTLE

Dept. of Economics & Statistics Director Isaac A.

HOURWICHRussian U.S. U.S. Bureau

of CensusEva J OFFE Russian U.S. National

Child LaborCommission

Steno ElizabethGOLDSTEIN

Russian U.S. Student

Editorial Staff of Soviet RussiaManaging

editor J acob w.HARTMANN

U.S. U.S. College of City of New

YorkSteno Ray TROTSKY Russian Russia Student

Translator TheodnreBRESLAUER

Russian Russia—

Clerk VastlyIVANOFF

Russian Russia—

Clerk David

OLDFIELD

Russian Russia—

Translator J .BLANKSTEIN

Russian Russia—

SOURCE: U.S., House, Conditions in Russia (Committee on ForeignAffairs), 66th Cong., 3rd sess. (Washington, D.C., 1921).

See also British list in U.S. State Department Decimal File, 316-22-656, which also has the name of J ulius Hammer.

DOCUMENT NO. 7

DESCRIPTION

Letter from National City Bank of New York to the U.S. Treasury, April 15, 1919,with regard to Ludwig Martens and his associate Dr. J ulius Hammer (316-118).

177



DOCUMENT

The National City Bank of New York New York, April 15, 1919

Honorable J oel Rathbone, Assistant Secretary of the Treasury Washington,D.C.

Dear Mr. Rathbone:

I beg to hand you herewith photographs of two documents which we havereceived this morning by registered mail from a Mr. L. Martens who c laims tobe the representative in the United States of the Russian Socialist FederalSoviet Republic, and witnessed by a Dr. J ulius Hammer for the Acting Direc torof the Financial Department.

You will see from these documents that there is a demand being made uponus for any and all funds on deposit with us in the name of Mr. Boris

Bakhmeteff, alleged Russian Ambassador in the United States, or in the nameof any individual, committee, or mission purporting to act in behalf of theRussian Government in subordination to Mr. Bakhmeteff or directly.

We should be very glad to receive from you whatever advice or instructionsyou may care to give us in this matter.

Yours respectfully, [sgd.] J . H. Carter, Vice President.

J HC:M

Enclosure

COMMENTS

The significance of this letter is related to the long-time assoc iation (1917-1974) of the Hammer family with the Soviets.

DOCUMENT NO. 8

DESCRIPTION

Letter dated August 3, 1920, from Soviet courier "Bill" Bobroff to KennethDurant, former aide to C olonel House. Taken from Bobroff by U.S. Departmentof J ustice.

178



DOCUMENT

Department of J ustice Bureau of Investigation, 15 Park Row, New York City, N. Y., August 10, 1920

Direc tor Bureau of Investigation United States Department of J ustice,Washington, D.C.

Dear Sir: Confirming telephone conversation with Mr. Ruch today, I amtransmitting herewith original documents taken from the effects of B. L.Bobroll, steamship Frederick VIII.

The letter addressed Mr. Kenneth Durant, signed by Bill, dated August 3, 1920,together with the translation from "Pravda," J uly 1, 1920, signed by Trotzki, andcopies of cablegrams were found inside the blue envelope addressed Mr.Kenneth Durant, 228 South Nineteenth Street, Philadelphia, Pa. This blueenvelope was in turn sealed inside the white envelope attached.

Most of the effects of Mr. Bobroff consisted of machinery catalogues,specifications, correspondence regarding the shipment of variousequipment, etc., to Russian ports. Mr. Bobroff was closely questioned byAgent Davis and the customs authorities, and a detailed report of same willbe sent to Washington.

Very truly yours, G. F. Lamb, Division Superintendent

LETTER TO KENNETH DURANTDear Kenneth: Thanks for your most welcome letter. I have felt very much cutoff and hemmed in, a feeling which has been sharply emphasized by recentexperiences. I have felt distressed at inability to force a different attitudetoward the bureau and to somehow get funds to you. To cable $5,000 toyou, as was done last week, is but a sorry joke. I hope the proposal to sell goldin America, about which we have been cabling recently, will soon be foundpracticable. Yesterday we cabled asking if you could sell 5,000,000 rubles ata minimum of 45 cents, present market rate being 51.44 cents. That would netat least $2,225,000. L's present need is $2,000,000 to pay Niels Juul & Co., in

Christiania, for the first part of the coal shipment from America to Vardoe,Murmansk, and Archangel. The first ship is nearing Vardoe and the secondleft New York about July 28. Altogether, Niels J uul & Co., or rather the Norges'Bank, of Christiania, on their and our account, hold $11,000,000 gold rubles of ours, which they themselves brought from Reval to Christiania, as security forour coal order and the necessary tonnage, but the offers for purchase of thisgold that they have so far been able to get are very poor, the best being

179



$575 per kilo, whereas the rate offered by the American Mint or TreasuryDepartment is now $644.42, and considering the large sum involved it wouldbe a shame to let it go at too heavy a loss. I hope that ere you get this youwill have been able to effect the sale, at the same time thus getting aquarter of a million dollars or more for the bureau. If we can't in some way

pay the $2,000,000 in Christiania, that was due four days ago, within a veryshort time, Niels J uul & Co. will have the right to sell our gold that they nowhold at the best price then obtainable, which, as stated above, is quite low.

We don't know yet how the Canadian negotiations are going on. Weunderstand Nuorteva turned over the strings to Shoen when N.'s arrestseemed imminent. We don't at this writing know where Nuorteva is. Our guessis that after his enforced return to England from Esbjerg, Denmark, Sir Basil Thomson had him shipped aboard a steamer for Reval, but we have not yetheard from Reval that he has arrived there, and we certainly would hearfrom Goukovski or from N. himself. Humphries saw Nuorteva at Esbjerg, and ishimself in difficulties with the Danish police because of it. All his connectionsare being probed for; his passport has been taken away: he has been uptwice for examination, and it looks as if he will be lucky if he escapesdeportation. It was two weeks ago that Nuorteva arrived at Esbjerg, 300 milesfrom here, but having no Danish visé, the Danish authorities refused to permithim to land, and he was transferred to a steamer due to sail at 8 o'clock thefollowing morning. By depositing 200 kroner he was allowed shore leave for acouple of hours. Wanting to get Copenhagen on long-distance wire andhaving practically no more money, he once more pawned that gold watchof his for 25 kroner, therewith getting in touch with Humphries, who within half

an hour jumped aboard the night train, slept on the floor, and arrived atEsbjerg at 7:30. Humphries found Nuorteva, got permission from the captainto go aboard, had 20 minutes with N., then had to go ashore and the boatsailed. Humphries was then invited to the police office by two plain-clothesmen, who had been observing the proceedings. He was closely questioned,address taken, then released, and that night took train back toCopenhagen. He sent telegrams to Ewer, of Daily Herald, Shoen, and toKliskho, at 128 New Bond Street, urging them to be sure and meet Nuorteva'sboat, so that N. couldn't again be spirited away, but we don't know yet justwhat happened. The British Government vigorously denied that they had any

intention of sending him to Finland. Moscow has threatened reprisals if anything happens to him. Meantime, the investigation of H. has begun. Hewas called upon at his hotel by the police, requested to go to headquarters(but not arrested), and we understand that his case is now before the ministerof justice. Whatever may be the final outcome, Humphries comments uponthe reasonable courtesy shown him, contrasting it with the ferocity of the Redraids in America.

180



He found that at detective headquarters they knew of some of his outgoingletters and telegrams.

I was interested in your favorable comment upon the Krassin interview of Tobenken's (you do not mention the Litvinoff one), because I had to fight like

a demon with L. to get the opportunities for Tobenken. Through T. arrived witha letter from Nuorteva, as also did Arthur Ruhl, L. brusquely turned down inless than one minute the application T. was making to go into Russia, wouldhardly take time to hear him, saying it was impossible to allow twocorrespondents from the same paper to enter Russia. He gave a visé to Ruhl,largely because of a promise made last summer to Ruhl by L. Ruhl then wentoff to Reval, there to await the permission that L. had cabled asking Moscowto give. Tobenken, a nervous, almost a broken man because of his turndown, stayed here. I realized the mistake that had been made by the snap judgment, and started in on the job of getting it changed. Cutting a longstory short, I got him to Reval with a letter to Goukovsky from L. In themeantime Moscow refused Ruhl, notwithstanding L's visé. L. was maddenedat affront to his visé, and insisted that it be honored. It was, and Ruhlprepared to leave. Suddenly word came from Moscow to Ruhl revoking thepermission and to Litvinoff, saying that information had reached Moscow thatRuhl was in service of State Department. At time of writing, both Tobenkenand Ruhl are in Reval, stuck.

I told L. this morning of the boat leaving tomorrow and of the courier B.available, asked him if he had anything to write to Martens, offered to take itin shorthand for him, but no, he said he had nothing to write about that I

might perhaps send duplicates of our recent cables to Martens.

Kameneff passed by here on a British destroyer en route to London, anddidn't stop off here at all, and Krassin went direct from Stockholm. Of thenegotiations, allied and Polish, and of the general situation you know aboutas much as we do here. L's negotiations with the Italians have finally resultedin establishing of mutual representation. Our representative, Vorovsky, hasalready gone to Italy and their representative, M. Gravina, is en route toRussia. We have just sent two ship loads of Russian wheat to Italy fromOdessa.

Give my regards to the people of your circle that I know. With all good wishesto you.

Sincerely yours, Bill

The batch of letters you sent — 5 Cranbourne Road, C harlton cum Hardy,Manchester, has not yet arrived.

L's recommendation to Moscow, since M. asked to move to Canada, is that

181



M. should be appointed there, and that N., after having some weeks inMoscow acquainting himself first hand, should be appointed representativeto America.

L. is sharply critical of the bureau for giving too easily visés and

recommendations. He was obviously surprised and incensed when B.reached here with contracts secured in Moscow upon strength of lettersgiven to him by M. The later message from M. evidently didn't reach Moscow.What L. plans to do about it I don't know. I would suggest that M. cable incipher his recommendation to L. in this matter. L. would have nothing to dowith B. here. Awkward situation may be created.

L. instanced also the Rabinoff recommendation.

Two envelopes, Mr. Kenneth Durant, 228 South Nineteenth Street,Philadelphia, Pa., U.S.A.

SOURCE: U.S. State Department Dec imal File, 316-119-458/64.

NOTE: IDENTIFICATION OF INDIVIDUALS

William (Bill) L.BOBROFF

Soviet courier and agent. Operated Bobroff Foreign Trading and Engineering Company of Milwaukee.Invented the voting system used in the Wisconsin

Legilature.KennethDURANT

Aide to Colonel House; see text.

SHOEN Employed by International Oxygen Co., owned byHeller, a prominent financier and Communist.

EWER Soviet agent, reporter forLondon Daily Herald.

KLISHKO Soviet agent in Scandinavia

NUORTEVA Also known as Alexander Nyberg, first Soviet

representative in United States; see text.

Sir Basil THOMPSON

Chief of British Intelligence

"L" LITVINOFF.

182



"H" Wilfred Humphries, associated with Martens and Litvinoff,member of Red Cross in Russia.

Bolshevik commissar of trade and labor, former head of

Siemens-Schukert in Russia.

KRASSIN

COMMENTS

This letter suggests close ties between Bobroff and Durant.

DOCUMENT NO. 9

DESCRIPTION

Memorandum referring to a request from Davison (Morgan partner) to Thomas Thacher (Wall Street attorney associated with the Morgans) andpassed to Dwight Morrow (Morgan partner), April 13, 1918.

DOCUMENT

The Berkeley Hotel, London April 13th, 1918.

Hon. Walter H. Page, American Ambassador to England, London.

Dear Sir:

Several days ago I received a request from Mr. H. P. Davison, Chairman of the War Council of the American Red Cross, to confer with Lord Northclifferegarding the situation in Russia, and then to proceed to Paris for otherconferences. Owing to Lord Northcliffe's illness I have not been able to conferwith him, but am leaving with Mr. Dwight W. Morrow, who is now staying at

the Berkeley Hotel, a memorandum of the situation which Mr. Morrow willsubmit to Lord Northcliffe on the latter's return to London.

For your information and the information of the Department I enclose to you,herewith, a copy of the memorandum.

Respectfully yours, [sgd.] Thomas D. Thacher.

183



COMMENT

Lord Northcliffe had just been appointed director of propaganda. This isinteresting in the light of William B. Thompson's subsidizing of Bolshevikpropaganda and his connection with the Morgan-Rockefeller interests.

DOCUMENT NO. 10

DESCRIPTION

This document is a memorandum from D.C. Poole, Division of Russian Affairs inthe Department of State, to the secretary of state concerning a conversationwith Mr. M. Oudin of General Electric.

DOCUMENT

May 29, 1922

Mr. Sec retary:

Mr. Oudin, of the General Electric C ompany, informed me this morning thathis company feels that the time is possibly approaching to beginconversations with Krassin relative to a resumption of business in Russia. I told

him that it is the view of the Department that the course to be pursued in thismatter by American firms is a question of business judgment and that theDepartment would certainly interpose no obstacles to an American firmresuming operations in Russia on any basis which the firm consideredpracticable.

He said that negotiations are now in progress between the General ElectricCompany and the Allgemeine Elektrizitats Gesellschaft for a resumption of the working agreement which they had before the war. He expects that theagreement to be made will include a provision for cooperation of Russia.

Respectfully, DCP D.C. Poole

COMMENT

This is an important document as it relates to the forthcoming resumption of relations with Russia by an important American company. It illustrates that theinitiative came from the company, not from the State Department, and that

184



no consideration was given to the effect of transfer of General Electrictechnology to a self-declared enemy. This GE agreement was the first stepdown a road of major technical transfers that led directly to the deaths of 100,000 Americans and countless allies.

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